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Required information [The following information applies to the questions displayed below.] On January 1, 2021, the general ledger of ACME Fireworks includes the following
Required information [The following information applies to the questions displayed below.] On January 1, 2021, the general ledger of ACME Fireworks includes the following account balances: Accounts Cash Accounts Receivable Debit $ 26,300 48,600 Credit Allowance for Uncollectible Accounts $ 5,400 Inventory 21,200 Land 58,000 Equipment 21,000 Accumulated Depreciation 2,700 Accounts Payable 29,700 Notes Payable (6%, due April 1, 2022) 62,000 Common Stock 47,000 Retained Earnings 28,300 Totals $175,100 $175,100 During January 2021, the following transactions occur: January 2 Sold gift cards totaling $10,400. The cards are redeemable for merchandise within one year of the purchase date. January 6 Purchase additional inventory on account, $159,000. January 15 Firework sales for the first half of the month total $147,000. All of these sales are on account. The cost of the units sold is $79,800. January 23 Receive $126,600 from customers on accounts receivable. January 25 Pay $102,000 to inventory suppliers on accounts payable. January 28 Write off accounts receivable as uncollectible, $6,000. January 30 Firework sales for the second half of the month total $155,000. Sales include $11,000 for cash and $144,000 on account. The cost of the units sold is $85,500. January 31 Pay cash for monthly salaries, $53,200. 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 $4,200 and a two-year service life. The company estimates future uncollectible accounts. The company determines $23,000 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 3% of these accounts are estimated to be uncollectible. (Hint: Use the January 31 accounts receivable balance calculated in the general ledger.) Accrued interest expense on notes payable for January. Accrued income taxes at the end of January are $14,200. By the end of January, $4,200 of the gift cards sold on January 2 have been redeemed.
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