Required information [The following information applies to the questions displayed below.] On January 1, 2021, the general ledger of Big Blast Fireworks includes the following account balances: Debit Credit Accounts $ 22,700 38,500 Cash Accounts Receivable Allowance for Uncollectible 3,900 $ Accounts 34,000 67,600 Inventory Land Accounts Payable Notes Payable (6%, due in 3 years) Common Stock 30,400 34,000 60,000 34,500 Retained Earnings $162,800 $162,800 Totals The $34,000 beginning balance of inventory consists of 340 units, each costing $100. During January 2021, Big Blast Fireworks had the following inventory transactions: 3 Purchase 1,300 units for $141,700 on account ($109 each). 8 Purchase 1,400 units for $159,600 on account ($114 each). January January January 12 Purchase 1,500 units for $178,500 on account ($119 each). January 15 Return 120 of the units purchased on January 12 because of defects January 19 Sell 4,300 units on account for $645,000. The cost of the units sold is determined using a FIFO perpetual inventory system. January 22 Receive $621,000 from customers on accounts receivable. January 24 Pay $451,000 to inventory suppliers on accounts payable. January 27 Write off accounts receivable as uncollectible, $2,900. January 31 Pay cash for salaries during January, $118,000 The following information is available on January 31, 2021. a. At the end of January, the company estimates that the remaining units of inventory are expected to sell in February for only $100 each. b. The company estimates future uncollectible accounts. The company determines $4,400 of accounts receivable on January 31 are past due, and 35% 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. Interest is expected to be paid each December 31. d. Accrued income taxes at the end of January are $12,700. a. At the end of January, the company estimates that the remaining units of inventory are expected to sell in February for only $100 each. b. The company estimates future uncollectible accounts. The company determines $4,400 of accounts receivable on January 31 are past due, and 35% 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. Interest is expected to be paid each December 31 d. Accrued income taxes at the end of January are $12,700. 2. Record adjusting entries on January 31 for the above transactions. (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 2 4 At the end of January, the company estimates that the remaining units of inventory are expected to sell in February for only $100 each. Record the adjustment for net realizable value Note: Enter debits before credits Date General Journal Debit Credit January 31 Record entry View general journal Clear entry a. At the end of January, the company estimates that the remaining units of inventory are expected to sell in February for only $100 each. b. The company estimates future uncollectible accounts. The company determines $4,400 of accounts receivable on January 31 are past due, and 35% 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. Interest is expected to be paid each December 31 d. Accrued income taxes at the end of January are $12,700. 2. Record adjusting entries on January 31 for the above transactions. (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 1 2 3 The company estimates future uncollectible accounts. The company determines $4,400 of accounts receivable on January 31 are past due, and 35% of these accounts are estimated to be uncollectible. The remaining accounts receivable on January 31 are not past due, and 5% Note: Enter debits before credits Credit Date General Journal Debit January 31 Record entry View general journal Clear entry a. At the end of January, the company estimates that the remaining units of inventory are expected to sell in February for only $100 each. b. The company estimates future uncollectible accounts. The company determines $4,400 of accounts receivable on January 31 are past due, and 35% 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. Interest is expected to be paid each December 31. d. Accrued income taxes at the end of January are $12,700. 2. Record adjusting entries on January 31 for the above transactions. (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 1 2 3 4 Accrued interest expense on notes payable for January. Interest is expected to be paid each December 31. Record the adjustment for interest expense Note: Enter debits before credits Credit Date General Journal Debit January 31 View general journal Record entry Clear entry 4. Prepare a multiple-step income statement for the period ended January 31, 2021. BIG BLAST FIREWORKS Multiple-step Income Statement For the year ended January 31, 2021 Total operating expenses Operating income (loss) 0 7. Analyze how well Big Blast Fireworks' manages its inventory: a-1. Calculate the inventory turnover ratio for the month of January. (Round your final answer to 1 decimal place) The Inventory turnover ratio is a-2. If the industry average of the inventory turnover ratio for the month of January is 19.2 times, is the company managing its inventory more or less efficiently than other companies in the same industry? More OLess b-1. Calculate the gross profit ratio for the month of January. (Round your final answer to 1 decimal place) The Gross Profit Ratio % is b-2. If the industry average gross profit ratio is 30.0%, is the company more or less profitable per dollar of sales than other companies in the same industry? More Less c. Is the company's strategy to sell a higher volume of less expensive items or does the company appear to be selling a lower volume of more expensive items? Higher volume of less expensive Lower volume of more expensive