! Required Information On January 1, 2021, the general ledger of ACME Fireworks Includes the following account balances: Accounts Debit Credit Cash $ 25,100 Accounts Receivable 46,200 Allowance for Uncollectible Accounts $ 4,200 Inventory 20,000 Land 46,000 Equipment 15,000 Accumulated Depreciation 1,500 Accounts Payable 28,500 Notes Payable (6%, due April 1, 2022) 50,000 Common Stock 35,000 Retained Earnings 33, 100 Totals $152,300 $152,300 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. 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.) a. Depreciation on the equipment for the month of January is calculated using the straight-line method. At the time the equipment was purchased, the company estimated a residual value of $3,000 and a two-year service life. b. The company estimates future uncollectible accounts. The company determines $11,000 of accounts receivable on January 31 are past due, and 30% of these accounts are estimated to be uncollectible. The remaining accounts receivable on January 31 are not past due, and 5% of these accounts are estimated to be uncollectible. (Hint: Use the January 31 accounts receivable balance calculated in the general ledger.) c. Accrued interest expense on notes payable for January. d. Accrued income taxes at the end of January are $13,000. e. By the end of January, $3,000 of the gift cards sold on January 2 have been redeemed. 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.) 3. Prepare an adjusted trial balance as of January 31, 2021. ACME Fireworks Adjusted Trial Balance January 31, 2021 Accounts Debit Credit Cash Accounts Payable Supplies Totals $ 0 $ 0 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 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 7. Analyze the following for ACME Fireworks Requirement 1: 8-1. Calculate the current ratio at the end of January. Current Ratio + Choose Denominator Choose Numerator Current Ratio 11 Current Ratio 11 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 O 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 . Il Acid-test Ratio 11 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 O 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 Denominator Choose Numerator : Current Ratio Current Ratio times c-2. Indicate whether the revised ratio would increase, decrease, or remain unchanged. Decrease the current ratio O Increase the current ratio Remain unchanged