Required information [The following information applies to the questions displayed below. On January 1, 2021, the general ledger of TNT Fireworks includes the following account balances 17 Accounts Credit Debit Cash $ 5,900 25,400 $ 36,500 14,400 157,000 Accounts Receivable 57 warded Allowance for Uncollectible Accounts Inventory Notes Receivable (58, due in 2 years) Land 2,400 ed Accounts Payable 15,000 222,000 52,800 Common Stock Retained Earnings Totals $292,200 $292,200 During January 2021, the following transactions occur January 1 Purchase equipment for $19,700. The company estimates a residual value of $1,700 and a five-year service life. January 4 Pay cash on accounts payable, $9, 700 January January 15 Receive cash on accounts receivable, $22,200. January 19 Pay cash for salaries, $30,000. January 28 Pay cash for January utilities, $16,700. January 30 sales for January total $222,000. All of these sales are on account. The cost of the unita sold is 8 Purchase additional inventory on account, $84,900. $116,000 Information for adjusting entries a. Depreciation on the equipment for the month of January is calculated using the straight-line method. b. The company estimates future uncollectible accounts. The company determines $3,200 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 3 % of these accounts are estimated to be uncollectible. (Hint: Use the January 31 accounts receivable balance calculated in the general ledger) c. Accrued interest revenue on notes receivable for January d. Unpaid salaries at the end of January are $32,800. e. Accrued income taxes at the end of January are $9,200. 4. Prepare a multiple-step income statement for the period ended January 31, 2021. TNT FIREWORKS Multiple-Step Income Statement For the month ended January 31, 2021 Sales Revenue $ 222,000 (116,000) Cost of Goods Sold Gross Profit 106,000 Expenses Salaries Expense 62,800 Utilities Expense 16,700 Depreciation Expense 300 Income Tax Expense 9,200 Bad Debt Expense 5,860 Total Operating Expenses 94,860 Operating Income 11,140 Income after taxes 11,140 Interest Revenue 60X Net Income 11,080 Red text indicates no response was expected in a cell or a formula-based calculation is incorrect; no points deducted. 7. Analyze how well TNT Fireworks manages its assets: Requirement 1: a-1. Calculate the return on assets ratio for the month of January Return on Assets Ratio Choose Numerator Choose Denominator Return on Assets Ratio Retun on assets a-2. If the average return on assets for the industry in January is 2% , is the company more or less profitable than other companies in the same industry? More profitable Less profitable b-1. Calculate the profit margin for the month of January. Profit Margin Choose Numerator Choose Denominator Profit Margin + Profit Margin b-2. If the industry average profitmargin is 4% , is the company more or less efficient at converting sales to profit than other companies in the same industry? More efficient Less efficient c-1. Calculate the asset turnover ratio for the month of January. Asset Turnover Ratio Choose Numerator Choose Denominator Asset Turnover Ratio Asset Turnover times es c-2. If the industry average asset turnover is 0.4 times per month, is the company more or less efficient at producing revenues with its assets than other companies in the same industry? More efficient Less efficient
