On January 1 2018 the general ledger of Big Blast Flreworks

On January 1, 2018, the general ledger of Big Blast Flreworks Includes the folloWing account balances: Debit Credit Accounts Cash Accounts Receivable Inventory Land Allowance for Uncollectible Accounts Accounts Payable Notes Payable (8%, due in 3 years) Common Stock Retained Earnings $ 24,388 42,588 42,888 79,688 2,7e8 29,288 42,888 68,888 46,588 $ 188,488 $ 188,488 Totals The $42,000 beginning balance of Inventory consists of 420 units, each costing $100. During January 2018, Big Blast Fireworks had the following Inventory transactions: January 3 Purchase 1,858 units for $115,588 on account ($118 each) January 8 Purchase 1,158 units for $132,258 on account ($115 each) January 12 Purchase 1,258 units for $158,88 on account ($128 each) January 15 Return 168 of the units purchased on January 12 because of defects anuary 19 Sell 3,680 units on account for $576,8e0. The cost of the units sold is determined using a FIFO perpetual inventory system January 22 Receive $529,88 from customers on accounts receivable January 24 Pay $359,88e to inventory suppliers on accounts payable January 27 Write off accounts receivable as uncollectible, $2,18e January 31 Pay cash for salaries during January, $11e,808 The following Information is avallable on January 31, 2018 a. At the end of January, the company estimates that the remalning units of Inventory are expected to sell In February for only $100 each b. At the end of January. $5,200 of accounts receivable are past due, and the company estimates that 30% of these accounts will not be collected. Of the remaining accounts receivable, the company estimates that 5% will not be collected. c. Accrued Interest expense on notes payable for January. Interest is expected to be pald each December 31 d. Accrued Income taxes at the end of January are $13,500 General Journal GeneralTrial Balace Statement Ledger irement ncome Balance Shet Analysis 1. Record each of the transactions listed above in the \'General Journal\' tab (these are shown as items 1 -10) assuming a FIFO perpetual inventory system. Review the \'General Ledger\' and the \'Trial Balance\' tabs to see the effect of the transactions on the account balances. 2. Record adjusting entries on January 31. in the \'General Journal tab (these are shown as items 11-14) 3. Review the adjusted Trial Balance\' as of January 31, 2018, in the \'Trial Balance\' tab. 4. Prepare a multiple-step income statement for the period ended January 31, 2018, in the \'Income Statement\' tab. 5. Prepare a classified balance sheet as of January 31, 2018, in the \'Balance Sheet\' tab. 6. Record the closing entries in the \'General Journal tab (these are shown as items 15-17) 7. Using the information from the requirements above, complete the \'Analysis\' tab

Solution

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Working:

No.	Date	General Journal	Debit	Credit
1	Jan. 3	Inventory (1050 x $110)	115500
		Accounts payable		115500
		(To record purchase of inventory on account)
2	Jan. 8	Inventory (1150 x $115)	132250
		Accounts payable		132250
		(To record purchase of inventory on account)
3	Jan. 12	Inventory (1250 x $120)	150000
		Accounts payable		150000
		(To record purchase of inventory on account)
4	Jan. 15	Accounts payable	19200
		Inventory (160 x $120)		19200
		(To record purchase returns)
5	Jan. 19	Accounts receivable	576000
		Sales revenue		576000
		(To record sales on account)
6	Jan. 19	Cost of goods sold	407350
		Inventory [$42000 + $115500 + $132250 + (980 x $120)]		407350
		(To record the cost of sales)
7	Jan. 22	Cash	529000
		Accounts receivable		529000
		(To record collections on account)
8	Jan. 24	Accounts payable	359000
		Cash		359000
		(To record payments on account)
9	Jan. 27	Allowance for uncollectible accounts	2100
		Accounts receivable		2100
		(To record write-off of uncollectible accounts)
10	Jan. 31	Salaries expense	110000
		Cash		110000
		(To record cash paid for salaries)