Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

Required information Exercise 8-18 Complete the accounting cycle (LO8-1,8-2, 8-4, 8-6) [The following information applies to the questions displayed below] On January 1, 2021, the

image text in transcribed
image text in transcribed
image text in transcribed
image text in transcribed
image text in transcribed
Required information Exercise 8-18 Complete the accounting cycle (LO8-1,8-2, 8-4, 8-6) [The following information applies to the questions displayed below] On January 1, 2021, the general ledger of ACME Fireworks includes the following account balances: Debit Credit Accounts Cash $ 25,200 Accounts Receivable. 46,400 Allowance for Uncollectible $ 4,300 Accounts Inventory 20,100 Land 47,000 Equipment 16,000 Accumulated Depreciation 1,600 Accounts Payable 28,600 Notes Payable (6%, due April 1, 2022) 51,000 Common Stock 36,000 Retained Earnings 33,200 Totals $154,700 $154,700 During January 2021, the following transactions occur. January 2 Sold gift cards totaling $8,208. The cards are redeemable for merchandise within one year of the purchase date. January 6 Purchase additional inventory on account, $148,000. January 15 Firework sales for the first half of the month total $136,000. All of these sales are on account. The cost of the units sold is $74,300. January 23 Receive $125,500 from customers on accounts receivable. January 25 Pay $91,000 to inventory suppliers on accounts payable. January 28 Write off accounts receivable as uncollectible, $4,900. January 30 Firework sales for the second half of the month total $144,000. Sales include $10,000 for cash and $134,000 on account. The cost of the units sold is $80,000. January 31 Pay cash for monthly salaries, $52,100. Exercise 8-18 Part 4 4. Prepare a multiple-step income statement for the period ended January 31, 2021 ACME FIREWORKS Income Statement For the year ended January 31, 2021 Total operating expenses Exercise 8-18 Part 5 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.) ACME FIREWORKS Classified Balance Sheet January 31, 2021 Assets Liabilities Less: Allowance for Uncollectible Accounts Total Current Assets Total Current Liabilities: Total Liabilities Stockholders' Equity Total Stockholders' Equity Total Liabilities and Stockholders' Equity Total Assets Exercise 8-18 Part 6 6. Record closing entries. (If no entry is required for a transaction/event, select "No Journal Entry Required" in the first account field.) View transactioist X 1 Record the closing entry for revenue accounts. 2 Record the closing entry for expense accounts. Note: journal entry has been entered Record entry Clear entry T Credit View general journal Requirement 1: a-1. Calculate the current ratio at the end of January. Current Ratio Choose Numerator Choose Denominator Current Ratio Current Ratio ce a-2. If the average current ratio for the industry is 1.80, is ACME Fireworks more or less liquid than the industry average? More liquid Less liquid Requirement 2: b-1. Calculate the acid-test ratio at the end of January. Acid-test Ratio Choose Numerator Choose Denominator = Acid-test Ratio Acid-test Ratio b-2. If the average acid-test ratio for the industry is 150, is ACME Fireworks more or less likely to have difficulty paying its currently maturing debts (compared to the industry average)? More likely Less likely Requirement 3: 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. Current Ratio Choose Numerator Choose Denominator Current Ratio Current Ratio times c-2. Indicate whether the revised ratio would increase, decrease, or remain unchanged. Decrease the current ratio Increase the current ratio Remain unchanged

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image

Step: 3

blur-text-image

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

Auditing At The Speed Of Risk With An Agile Continuous Audit Plan

Authors: Norman Marks

1st Edition

B09PMBSWSC, 979-8787044393

More Books

Students also viewed these Accounting questions

Question

What is an intentional tort?

Answered: 1 week ago

Question

4. How is culture a contested site?

Answered: 1 week ago