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: Credit Debit $ 11,200 34.000 1.800 Accounts Cash Accounts Receivable Allowance for Uncollectible Accounts Inventory Land Buildings Accumulated Depreciation Accounts Payable Common Stock Retained Earnings Totals 152,000 67,300 120,000 9,600 17,700 200,000 155,400 $384,500 $384,500 During January 2021, the following transactions occur January Borrow $100,000 from Captive Credit Corporation. The installment note bears interest at 78 annually and matures in 5 years. Payments of $1,980 are required at the end of each month for 60 months. January Receive $31,000 from customers on accounts receivable. January Pay cash on accounts payable, $11,000. 10 January Pay cash for salaries, $28,900. January Firework sales for the month total $195,000. Sales Include $65,000 for cash and $130,000 on account. 30 The cost of the units sold is $112,500. January Pay the first monthly installment of $1,980 related to the $100,000 borrowed on January 1. Round your 31 interest calculation to the nearest dollar. Exercise 9-21 Part 1 1. Record each of the transactions listed above. (If no entry is required for a particular transaction/event, select "No Journal Entry Required" in the first account field.) View transaction list Journal entry worksheet 2 3 4 5 6 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. Record the issuance of the long-term note payable. Note: Enter debits before credits Date General Journal Debit Credit January 01 Exercise 9-21 Part 3 3. Prepare an adjusted trial balance as of January 31, 2021. (Hint: The carrying value of notes payable on January 31, 2021 is $98,603; $17,411 is reported as notes payable in the current liabilities section and $81,192 is reported as notes payable in the long-term liabilities section ($17, 411 + $81,192 = $98,603). Freedom Fireworks Adjusted Trial Balance January 31, 2021 Accounts Debit Credit Exercise 9-21 Part 4 4. Prepare a multiple-step income statement for the period ended January 31, 2021 Freedom Fireworks Multiple-Step Income Statement For the month ended January 31, 2021 Gross Profit Total Operating Expenses Exercise 9-21 Part 5 5. Prepare a classified balance sheet as of January 31, 2021. (Hint: The carrying value of notes payable on January 31, 2021 is $98,603; $17.411 is reported as notes payable in the current liabilities section and $81,192 is reported as notes payable in the long-term liabilities section ($17,411 + $81,192 = $98,603). (Amounts to be deducted should be indicated with a minus sign.) Answer is not complete. Freedom Fireworks Classified Balance Sheet January 31, 2021 Assets 165,320 Accounts Payable 133.000 Notes Payable (Current) 39,500 Cash Accounts Receivable Inventory 24.111 81,192 105. 3 Total Current Liabilities Notes Payable Long Term) Total Labilities Sinhaltare Ful Draw 2 .. Exercise 9-21 Part 6 6. Record closing entries. (If no entry is required for a particular transaction/event, select "No Journal Entry Required" in the first account field.) View transaction list Journal entry worksheet Record the closing entry for revenue accounts Note: Enter debits before credits Date General Journal Debit Credit January 31, 2021 Exercise 9-21 Part 7 7. Analyze the following for Freedom Fireworks: Requirement 1: a-1. Calculate the debt to equity ratio. Debt to Equity Ratio Choose Denominator Choose Numerator . Debt to Equity Ratio Debt to Equity Ratio a-2. If the average debt to equity ratio for the industry is 1.0, is Freedom Fireworks more or less leveraged than other companies in the same industry? 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: Credit Debit $ 11,200 34.000 1.800 Accounts Cash Accounts Receivable Allowance for Uncollectible Accounts Inventory Land Buildings Accumulated Depreciation Accounts Payable Common Stock Retained Earnings Totals 152,000 67,300 120,000 9,600 17,700 200,000 155,400 $384,500 $384,500 During January 2021, the following transactions occur January Borrow $100,000 from Captive Credit Corporation. The installment note bears interest at 78 annually and matures in 5 years. Payments of $1,980 are required at the end of each month for 60 months. January Receive $31,000 from customers on accounts receivable. January Pay cash on accounts payable, $11,000. 10 January Pay cash for salaries, $28,900. January Firework sales for the month total $195,000. Sales Include $65,000 for cash and $130,000 on account. 30 The cost of the units sold is $112,500. January Pay the first monthly installment of $1,980 related to the $100,000 borrowed on January 1. Round your 31 interest calculation to the nearest dollar. Exercise 9-21 Part 1 1. Record each of the transactions listed above. (If no entry is required for a particular transaction/event, select "No Journal Entry Required" in the first account field.) View transaction list Journal entry worksheet 2 3 4 5 6 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. Record the issuance of the long-term note payable. Note: Enter debits before credits Date General Journal Debit Credit January 01 Exercise 9-21 Part 3 3. Prepare an adjusted trial balance as of January 31, 2021. (Hint: The carrying value of notes payable on January 31, 2021 is $98,603; $17,411 is reported as notes payable in the current liabilities section and $81,192 is reported as notes payable in the long-term liabilities section ($17, 411 + $81,192 = $98,603). Freedom Fireworks Adjusted Trial Balance January 31, 2021 Accounts Debit Credit Exercise 9-21 Part 4 4. Prepare a multiple-step income statement for the period ended January 31, 2021 Freedom Fireworks Multiple-Step Income Statement For the month ended January 31, 2021 Gross Profit Total Operating Expenses Exercise 9-21 Part 5 5. Prepare a classified balance sheet as of January 31, 2021. (Hint: The carrying value of notes payable on January 31, 2021 is $98,603; $17.411 is reported as notes payable in the current liabilities section and $81,192 is reported as notes payable in the long-term liabilities section ($17,411 + $81,192 = $98,603). (Amounts to be deducted should be indicated with a minus sign.) Answer is not complete. Freedom Fireworks Classified Balance Sheet January 31, 2021 Assets 165,320 Accounts Payable 133.000 Notes Payable (Current) 39,500 Cash Accounts Receivable Inventory 24.111 81,192 105. 3 Total Current Liabilities Notes Payable Long Term) Total Labilities Sinhaltare Ful Draw 2 .. Exercise 9-21 Part 6 6. Record closing entries. (If no entry is required for a particular transaction/event, select "No Journal Entry Required" in the first account field.) View transaction list Journal entry worksheet Record the closing entry for revenue accounts Note: Enter debits before credits Date General Journal Debit Credit January 31, 2021 Exercise 9-21 Part 7 7. Analyze the following for Freedom Fireworks: Requirement 1: a-1. Calculate the debt to equity ratio. Debt to Equity Ratio Choose Denominator Choose Numerator . Debt to Equity Ratio Debt to Equity Ratio a-2. If the average debt to equity ratio for the industry is 1.0, is Freedom Fireworks more or less leveraged than other companies in the same industry