Required information Exercise 7-21B Complete the accounting cycle using long-term asset transactions (L07-4, 7-7) (The following information applies to the questions displayed below.] On January 1, Year 1, the general ledger of a company includes the following account balances: Credit Debit $ 59, 200 26,000 $ 2,700 Accounts Cash Accounts Receivable Allowance for Uncollectible Accounts Inventory Notes Receivable (5%, due in 2 years) Land Accounts Payable Common Stock Retained Earnings Totals 36,800 18,000 160,000 15,300 225,000 57,000 $ 300,000 $ 300,000 During January Year 1, the following transactions occur: January 1 Purchase equipment for $20,000. The company estimates a residual value of $2,000 and a four-year service life. January 4 Pay cash on accounts payable, $10,000. January 8 Purchase additional inventory on account, $87,900. January 15 Receive cash on accounts receivable, $22,500. January 19 Pay cash for salaries, $30,300. January 28 Pay cash for January utilities, $17,000. January 30 Sales for January total $225,000. All of these sales are on account. The cost of the units sold is $117,500. Information for adjusting entries: a. Depreciation on the equipment for the month of January is calculated using the straight-line method. b. The company estimates future uncollectible accounts. The company determines $3,500 of accounts receivable on January 31 are past due, and 50% of these accounts are estimated to be uncollectible. The remaining accounts receivable on January 31 are not past due, and 2% of these accounts are estimated to be uncollectible. (Hint: Use the January 31 accounts receivable balance calculated in the general ledger.) c. Accrued interest revenue on notes receivable for January. d. Unpaid salaries at the end of January are $33,100. e. Accrued income taxes at the end of January are $9,500. Exercise 7-21B Part 5 5. Prepare a classified balance sheet as of January 31, Year 1. (Deductible amounts should be indicated with a minus sign.) Answer is complete but not entirely correct. Balance Sheet January 31, Year 1 Assets Liabilities Cash $ Accounts Receivable $ 4,400 Accounts Payable 228,500 Salaries Payable (3,544) Income Tax Payable 75 93,200 33,100 9,500 Less: Allowance Interest Receivable Inventory 7,200 135,800 Total Current Assets Notes Receivable Total Current Liabilities 236,631 Stockholder's Equity 18,000 Common Stock 160,000 Retained Earnings 20,000 225,000 73,456 X Land Equipment Notes Receivable x (375) Total Stockholders' Equity 298,456 Total Assets 434,256 Total Liabilities and Stockholders' Equity $ 434,256