Required information Exercise 9-21 Complete the accounting cycle using long-term liability transactions (LO9-2, 9-8) [The following information applies to the questions displayed below.] On January 1, 2021, the general ledger of Freedom Fireworks includes the following account balances: Accounts Debit Credit Cash $ 11,200 Accounts Receivable 34,000 Allowance for Uncollectible Accounts $ 1,800 Inventory 152,000 Land 67,300 Buildings 120,000 Accumulated Depreciation 9,600 Accounts Payable 17,700 Common Stock 200,000 Retained Earnings 155,400 Totals $ 384,500 $ 384,500 During January 2021, the following transactions occur: January 1 Borrow $100,000 from Captive Credit Corporation. The installment note bears interest at 7% annually and matures in 5 years. Payments of $1,980 are required at the end of each month for 60 months. January 4 Receive $31,000 from customers on accounts receivable. January 10 Pay cash on accounts payable, $11,000. January 15 Pay cash for salaries, $28,900. January 30 Firework sales for the month total $195,000. Sales include $65,000 for cash and $130,000 on account. The cost of the units sold is $112,500. January 31 Pay the first monthly installment of $1,980 related to the $100,000 borrowed on January 1. Round your interest calculation to the nearest dollar. Exercise 9-21 Part 2 The following information is available on January 31, 2021. Depreciation on the building for the month of January is calculated using the straight-line method. At the time the building was purchased, the company estimated a service life of 10 years and a residual value of $24,000. The company estimates future uncollectible accounts. The company determines $3,000 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.) Unpaid salaries at the end of January are $26,100. Accrued income taxes at the end of January are $8,000. $17,411 of the long-term note payable balance will be paid over the next year. 2. Record the adjusting entries on January 31 for the above transactions. (If no entry is required for a particular transaction/event, select "No Journal Entry Required" in the first account field.)

Required information Journal entry worksheet 2 3 4 5 Depreciation on the building for the month of January is calculated using the straight-line method. At the time the building was purchased, the company estimated a service life of 10 years and a residual value of $24,000. Prepare the adjusting journal entry for depreciation Note: Enter debits before credits. Date General Journal Debit Credit January 31 Record entry Clear entry View general journal Required information Journal entry worksheet 2 3 4 5 The company estimates future uncollectible accounts. The company determines $3,000 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 296 of these Note: Enter debits before credits. Date General Journal Debit Credit January 31 Record entry Clear entry View general journal KPrev 8 9 10 of 11 Nex Journal entry worksheet 2 4 5 Unpaid salaies at the end of January are $26,100. Prepare the adjusting entry for salaries. Note: Enter debits before credits. Date General Journal Debit Credit January 31 Record entry Clear entry View general journal Required information Journal entry worksheet 2 3 4 5 Accrued income taxes at the end of January are $8,000. Prepare the adjusting entry for income tax. Note: Enter debits before credits Date General Journal Debit Credit January 31 Record entry Clear entry View general journal Journal entry worksheet 2 3 4 5 Record the reclassification of $17,411 from long-term notes payable to current notes payable. Note: Enter debits before credits Date General Journal Debit Credit January 31 Record entry Clear entry View general journal