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 $ 25,700 47,400 $ 4,800 Accounts Cash Accounts Receivable Allowance for Uncollectible Accounts Inventory Land Equipment Accumulated Depreciation Accounts Payable Notes Payable (6%, due April 1, 2022) Common Stock Retained Earnings 20,600 52,000 18,000 2,100 29,100 56,000 41,000 30,700 $163,700 Totals $ 163,700 During January 2021, the following transactions occur: January 2 Sold gift cards totaling $9,200. The cards are redeemable for merchandise within one year of the purchase date. January 6 Purchase additional inventory on account, $153,000. January 15 Firework sales for the first half of the month total $141,000. All of these sales are on account. The cost of the units sold is $76,800. January 23 Receive $126,000 from customers on accounts receivable. January 25 Pay $96,000 to inventory suppliers on accounts payable. January 28 Write off accounts receivable as uncollectible, $5,400. January 30 Firework sales for the second half of the month total $149,000. Sales include $13,000 for cash 36,000 on account. The cost of the units sold is $82,500. January 31 Pay cash for monthly salaries, $ 52,600. 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.) & Answer is not complete. ACME FIREWORKS Classified Balance Sheet January 31, 2021 Assets Liabilities Cash $ 25,300 Accounts Payable Deferred Revenue Accounts Receivable Less: Allowance for Uncollectible Accounts Inventory $ 193,000 (10,380) 182,620 14,300 Interest Payable Income Tax Payable Notes Payable $ 86,100 5,600 280 13,600 56,000 X Total Current Assets 222,220 Total Current Liabilities 161,580 Total Liabilities 161,580 Stockholders' Equity Land Equipment 52,000 18,000 (2,700) Common Stock Retained Earnings 41,000 86,940 Accumulated Depreciation 127,940 Total Stockholders' Equity Total Liabilities and Stockholders' Equity D Total Assets 289,520 $ 289,520 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 2 Record the closing entry for revenue accounts. Note: Enter debits before credits. General Journal Debit Credit Date January 31, 2021 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 expense accounts. Note: Enter debits before credits. General Journal Debit Credit Date January 31, 2021 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? O More liquid O 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)? O More 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 Numerator = Choose Denominator = Current Ratio Current Ratio II- times c-2. Indicate whether the revised ratio would increase, decrease, or remain unchanged. O Decrease the current ratio O Increase the current ratio O Remain unchanged
