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E3-21 PLEASE NOTE THAT THE NUMBERS IN THIS EXERCISE ARE DIFFERENT THAN IN THE TEXT!!! On January 1, 2024, the general ledger of Dynamite Fireworks includes the following account balances: Accounts Debit Credit Cash $ 28,300 16,550 Accounts Receivable Allowance for Uncollectible Accounts) 1,800 Supplies 2,500 Notes Receivable (5%, due in 2 years) Land 30,000 50,000 Accounts Payable 5,200 Common stock 98,000 22,350 Retained Earnings Totals $ 127,350 $ 127,350 During January 2024, the following transactions occur 2-Jan Provide services to customers for cash, 553,100. 6-Jan Provide services to customers on account, $77,050. 15-Jan Write off accounts receivable as uncollectible, $1,500 (Assume the company uses the allowance method) Pay cash for salaries, $50,700 21-lan Receive cash on accounts receivable, $46,000. 22-Jan 25-Jan Pay cash on accounts payable, $3,500. 30-Jan Pay cash for utilities during January, $18,500 Required) 1. Record each of the transactions listed above. 2 Record adjusting entries on January 31. a The company estimates future uncollectible accounts. The company determines $7,000 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 to split total accounts receivable into the $5,000 past due and the remaining amount not past due) b Supplies at the end of January total $1,700. All other supplies have been used C. Accrued interest revenue on notes receivable for January. Interest is expected to be received each December 31. d Unpaid salaries at the end of January are $23,500. 5
received each December 31. d. Unpaid salaries at the end of January are $23,500. 3. Prepare an adjusted trial balance as of January 31, 2024, after updating beginning balances (above) for transactions during January (Requirement 1) and adjusting entries at the end of January (Requirement 2) [Note: a worksheet is provided and the trial balance there counts for this] 4. Prepare an income statement for the period ended January 31, 2024. 5. Prepare a classified balance sheet as of January 31, 2024. 6. Record the closing entries. 7. Prepare a post-closing trial balance (Cathy added) 8. Analyze how well 3D Family Fireworks manages its receivables: Calculate the receivables turnover ratio for the month of January. (Hint: For the numerator, use total services provided to customers on account.) If the industry average of the receivables turnover ratios for the month of January is 4.2 times, is the company collecting cash from customers more or less efficiently than other companies in the same industry? b. Calculate the ratio of Allowance for Uncollectible Accounts to Accounts Receivable at the end of January. Based on a comparison of this ratio to the same ratio at the beginning of January, does the company expect an improvement or worsening in cash collections from customers on credit sales? GENERAL JOURNAL POST DATE DESCRIPTION REF 2 S Page: DEBIT 19 CREDIT
ACCOUNT DATE 2004 UPPE ACCOUNT DATE 2014 an ACCOUNT DATE 2034 ACCOUNT DATE 2004 Jan ACCOUNT DATE 2024 an ACCOUNT DATE ACCOUNT DATE 3024 las ACCOUNT DATE 3034 ACCOUN DATE 11 Cash Balance Accounts Receivable POST ITEM REF Falance N Allowance for Unclectible accounts POST ITEM REF Balance N Supplies FOST ACT Balance Notes Receivable (due in years FOST ITEM REF POST REF POST BEW ITEM BEM Interest Receiv TEM ITEM Accourts Fable ITEM Balance Land 15 Balance GENERAL LEDGER DE TEM FOST REF. A S Vie 4 POST MA DEBIT DEBIT DE DER DENT DEBIT DENT CREDIT CREDIT CREDIT CREDIT CREDIT CREDITY CREDIT CREDIT ACCOUNT NO DEBIT BALARRE 28.300.00 ACCOUNT NO DEBIT BALANCE 16.550.00 ACCOUNT NO DEAT ACCOUNT NO KAT 2.300.00 ACCOUNT NO DEBIT 30.000.00 ACCOUNT NO DEBIT ACCOUNT NO DEAT 50.000.00 ACCOUNT NO DENT ACCOUNT NO DESIT BALANCE BALANCE BALANCE 111 CREDIT 115 CREDIT BATANE SALANCE 1280000 143 CREDIT 201 CREDIT ONE ORGE'S 221 ONDIT
DATE 2024 ACCOUNT DATE ACCOUNT DATE 2024 IM 11 Balance ACCOUNT DATE 2034 Jan ACCOUNT ACCOUNT DATE ACCOUNT DATE ACCOUNT DATE ACCOUNT DATE ACCOUNT DA 1 Balance PEM Common Stock TEM ДЕМ Marce Service Revenue ITEM were come TEM upples Expense ITIM Salaries Expense ITEM ITEM Belexpe REM POST ALL POST REF V POST A N FOST FOST M POST REF POST BCF POST AD POST MY DENT DEBIT DENT DEBIT CENT DEBIT DEAT DENT prat CREDIT CREDIT CREDIT CREDIT CREDIT CREDIT CREDIT CREDIT CREDIT ACCOUNT NO DEBIT ACCOUNT NO DENT ACCOUNT NO DERIT ACCOUNT NO GAI ACCOUNT NO DENT ACCOUNT NO DENT ACCOUNT NOU DENT ACCOUNT NO DET ACCOUNT NO DEBIT BALANCE BALANCE BALANCE BALANCE BALANCE BALANSE BALANCE BALANCE 5,200.00 221 CREDIT 301 CREDIT 8.000.00 311 CREDIT 27.350.00 401 CREDIT 411 CREDIT 531 CREDIT 523 CHLO 331 CREDIT 341 CREDIT
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Revenue Service Revenue Interest Income Total Revenue Expenses Supplies Expense Salaries Expense Utilities Expense Bad Debt Expense Total Expenses Net Income (Loss) Dynamite Fireworks Income Statement For the month ended January 31, 2024
Beginning balance January 1, 2024 Issuance of common stock Add: Net income (or Less: Net loss) Less: Dividends Ending balance January 31, 2024 Dynamite Fireworks Statement of Stockholders' Equity For the month ended January 31, 2024 Common Stock Retained Earnings Total Stockholders Equity
Assets Current Assets Cash Accounts receivable Less: Allowance for Uncollectible Accounts Interest Receivable Supplies Total current assets Long-term Assets Notes receivable Land Total Assets Dynamite Fireworks Balance Sheet January 31, 2024 Accou Cash Accounts Receivable Allowance for Uncollectible Account Notes Rel Interest Receivable Land Accounts Payable Sala Pal Common Stock Service Revenue interest income Supplies Expense Sales Exper Uits Expe Bad Debe Expense Current liabilities Accounts Payable Salaries Payable Total current liabilities Common Stock Retained earnings Liabilities Total stockholders' equity Dynamite Fireworks Post Closing Trial Balance January 31, 2024 Stockholders' Equity Total liabilities and stockholders' equity Deb Ordt | ||