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: Credit Debit $ 25,600 47,200 $ 4,700 Accounts Cash Accounts Receivable Allowance for Uncollectible Accounts Inventory Land Equipment Accumulated Depreciation Accounts Payable Notes Payable (68, due April 1, 2022) Common Stock Retained Earnings Totals 20,500 51,000 17,500 2,000 29,000 55,000 40,000 31,100 $161,800 $161,800 During January 2021, the following transactions occur: January 2 Sold gift cards totaling $9,000. The cards are redeemable for merchandise within one year of the purchase date. January 6 Purchase additional inventory on account, $152,000. January 15 Firework sales for the first half of the month total $140,000. All of these sales are on account. The cost of the units sold is $76,300. January 23 Receive $125,900 from customers on accounts receivable. January 25 Pay $95,000 to inventory suppliers on accounts payable. January 28 Write off accounts receivable as uncollectible, $5,300. January 30 Firework sales for the second half of the month total $148,000. Sales include $10,000 for cash and $138,000 on account. The cost of the units sold is $82,000. January 31 Pay cash for monthly salaries, $52,500. 6. Record closing entries. (If no entry is required for a 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. General Journal Debit Credit Date January 31, 2021 Record entry Clear entry View general Journal View transaction list Journal entry worksheet Record the closing entry for expense accounts. Note: Enter debits before credits. General Journal Debit Credit Date January 31, 2021 Record entry Clear entry View general journal 7. Analyze the following for ACME Fireworks Requirement 1: a-1. Calculate the current ratio at the end of January. Current Ratio + Choose Denominator = Choose Numerator Current Ratio Current Ratio + a-2. If the average current ratio for the industry is 1.80, is ACME Fireworks more or less liquid than the industry average? More liquid O Less liquid a-2. If the average current ratio for the industry is 1.80, is ACME Fireworks more or less liquid than the industry average? More liquid Less liquid Requirement 2: b-1. Calculate the acid-test ratio at the end of January. Acid-test Ratio + Choose Denominator = Choose Numerator Acid-test Ratio Acid-test Ratio + b-2. If the average acid-test ratio for the industry is 1.50, is ACME Fireworks more or less likely to have difficulty paying its currently maturing debts (compared to the industry average)? More likely Less likely 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 O Remain unchanged Revise your worksheet to reflect these updated assumptions and then answer the questions that follow. Issue Date Maturity Date Principal Rate July 1, Year 1 April 1, Year 2 120,000 68 Required: 1. Use your spreadsheet to recalculate the amounts related to the note and then prepare the related journal entries. (If no entry is required for a transaction/event, select "No Journal Entry Required" in the first account field.) View transaction list Journal entry worksheet Prepare the journal entry to record the issuance of the note. Note: Enter debits before credits. Date General Journal Debit Credit July 01 Record entry Clear entry View general Journal Revise your worksheet based on these new assumptions and then answer the questions that follow. Number of units sold Estimated units needing warranty Estimated warranty cost per unit Portion of units fixed in current year Alternative: Portion of units fixed in current year 41,000 $ 260 08 200 Required: 1. What are the revised amount of estimated warranty units and future warranty costs? Units Future Warranty Costs 2. Prepare the journal entry to record the warranty expense. (If no entry is required for a transaction/event, select "No Journal Entry Required" in the first account field.) View transaction list Journal entry worksheet Prepare the year-end adjusting entry for estimated warranty costs, assuming all associated costs will occur in the future. Note: Enter debits before credits. Transaction General Journal Debit Credit a. Record the closing entry for revenue accounts. Note: Enter debits before credits. General Journal Debit Credit Date January 31, 2021 Record entry Clear entry View general Journal View transaction list Journal entry worksheet Record the closing entry for expense accounts. Note: Enter debits before credits. General Journal Debit Credit Date January 31, 2021 Record entry Clear entry View general journal 7. Analyze the following for ACME Fireworks Requirement 1: a-1. Calculate the current ratio at the end of January. Current Ratio + Choose Denominator = Choose Numerator Current Ratio Current Ratio + a-2. If the average current ratio for the industry is 1.80, is ACME Fireworks more or less liquid than the industry average? More liquid O Less liquid a-2. If the average current ratio for the industry is 1.80, is ACME Fireworks more or less liquid than the industry average? More liquid Less liquid Requirement 2: b-1. Calculate the acid-test ratio at the end of January. Acid-test Ratio + Choose Denominator = Choose Numerator Acid-test Ratio Acid-test Ratio + b-2. If the average acid-test ratio for the industry is 1.50, is ACME Fireworks more or less likely to have difficulty paying its currently maturing debts (compared to the industry average)? More likely Less likely 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 O Remain unchanged Revise your worksheet to reflect these updated assumptions and then answer the questions that follow. Issue Date Maturity Date Principal Rate July 1, Year 1 April 1, Year 2 120,000 68 Required: 1. Use your spreadsheet to recalculate the amounts related to the note and then prepare the related journal entries. (If no entry is required for a transaction/event, select "No Journal Entry Required" in the first account field.) View transaction list Journal entry worksheet Prepare the journal entry to record the issuance of the note. Note: Enter debits before credits. Date General Journal Debit Credit July 01 Record entry Clear entry View general Journal Revise your worksheet based on these new assumptions and then answer the questions that follow. Number of units sold Estimated units needing warranty Estimated warranty cost per unit Portion of units fixed in current year Alternative: Portion of units fixed in current year 41,000 $ 260 08 200 Required: 1. What are the revised amount of estimated warranty units and future warranty costs? Units Future Warranty Costs 2. Prepare the journal entry to record the warranty expense. (If no entry is required for a transaction/event, select "No Journal Entry Required" in the first account field.) View transaction list Journal entry worksheet Prepare the year-end adjusting entry for estimated warranty costs, assuming all associated costs will occur in the future. Note: Enter debits before credits. Transaction General Journal Debit Credit a.