Required information Exercise 8-18 Complete the accounting cycle (LO8-1, 8-2, 8-4, 8-6) On January 1, 2021, the general ledger of ACME Fireworks includes the following account balances: During January 2021 , the following transactions occur: January 2 Sold gift cards totaling $8,000. The cards are redeemable for merchandise within one year of the purchase date. January 6 Purchase additional inventory on account, $147,000. January 15 Firework sales for the first half of the month total $135,000. All of these sales are on account. The cost of the units sold is $73,800. January 23 Receive $125,400 from customers on accounts receivable. January 25 Pay $90,000 to inventory suppliers on accounts payable. January 28 Write off accounts receivable as uncollectible, $4,800. January 30 Firework sales for the second half of the month total $143,000. Sales include $11,000 for cash and $132,000 on account. The cost of the units sold is $79,500. January 31 Pay cash for monthly salaries, \$52,000. 3. Prepare an adjusted trial balance as of January 31, 2021. 4. Prepare a multiple-step income statement for the period ended January 31, 2021. 5. Prepare a classified balance sheet as of January 31, 2021. (Enter the Asset Accounts in order of liquidity. Amounts to be deducted should be indicated with a minus sign.) 7. Analyze the following for ACME Fireworks Requirement 1: a-1. Calculate the current ratio at the end of January. a-2. If the average current ratio for the industry is 1.8, is ACME Fireworks more or less liquid than the industry average? More liquid Less liquid b-1. Calculate the acid-test ratio at the end of January. b-2. If the average acid-test ratio for the industry is 1.5, is ACME Fireworks more or less likely to have difficulty paying its currently maturing debts (compared to the industry average)? More likely Less likely c-1. Assume the notes payable were due on April 1, 2021, rather than April 1, 2022. Calculate the revised current ratio at the end of January. c-2. Indicate whether the revised ratio would increase, decrease, or remain unchanged. Decrease the current ratio Increase the current ratio Remain unchanged Required information Exercise 8-18 Complete the accounting cycle (LO8-1, 8-2, 8-4, 8-6) On January 1, 2021, the general ledger of ACME Fireworks includes the following account balances: During January 2021 , the following transactions occur: January 2 Sold gift cards totaling $8,000. The cards are redeemable for merchandise within one year of the purchase date. January 6 Purchase additional inventory on account, $147,000. January 15 Firework sales for the first half of the month total $135,000. All of these sales are on account. The cost of the units sold is $73,800. January 23 Receive $125,400 from customers on accounts receivable. January 25 Pay $90,000 to inventory suppliers on accounts payable. January 28 Write off accounts receivable as uncollectible, $4,800. January 30 Firework sales for the second half of the month total $143,000. Sales include $11,000 for cash and $132,000 on account. The cost of the units sold is $79,500. January 31 Pay cash for monthly salaries, \$52,000. 3. Prepare an adjusted trial balance as of January 31, 2021. 4. Prepare a multiple-step income statement for the period ended January 31, 2021. 5. Prepare a classified balance sheet as of January 31, 2021. (Enter the Asset Accounts in order of liquidity. Amounts to be deducted should be indicated with a minus sign.) 7. Analyze the following for ACME Fireworks Requirement 1: a-1. Calculate the current ratio at the end of January. a-2. If the average current ratio for the industry is 1.8, is ACME Fireworks more or less liquid than the industry average? More liquid Less liquid b-1. Calculate the acid-test ratio at the end of January. b-2. If the average acid-test ratio for the industry is 1.5, is ACME Fireworks more or less likely to have difficulty paying its currently maturing debts (compared to the industry average)? More likely Less likely c-1. Assume the notes payable were due on April 1, 2021, rather than April 1, 2022. Calculate the revised current ratio at the end of January. c-2. Indicate whether the revised ratio would increase, decrease, or remain unchanged. Decrease the current ratio Increase the current ratio Remain unchanged