Business, 06.06.2020 16:57 mariamsakayanthebest

On January 1, 2018, the general ledger of ACME Fireworks includes the following account balances: Accounts Debit Credit
Cash $25,800
Accounts Receivable 47,600
Allowance for Uncollectible Accounts $4,900
Inventory 20,700
Land 53,000
Equipment 18,500
Accumulated Depreciation 2,200
Accounts Payable 29,200
Notes Payable (6% due April 1, 2016) 57,000
Common Stock 42,000
Retained Earnings 30,300
Totals $165,600 $165,600

During January 2018, the following transactions occur:

January 2 Sold gift cards totaling $9,400. The cards are redeemable for the merchandise within one year of the purchase date.
January 6 Purchase additional inventory on account $154,000
January 15 Firework sales for the first half of the month total $142,000. All of these sales are on account. The cost of the units sold is $77,300
January 23 Receive $126,100 from customers on accounts receivable
January 25 Pay $97,000 to inventory suppliers on accounts payable
January 28 Write off accounts receivable as uncollectible, $5,500
January 30 Firework sales for the second half of the month total $150,000. Sales include $15,000 for cash and $135,000 on account. The cost of the units sold is $83,000
January 31 Pay cash for monthly salaries $52,700

1. Depreciation on the equipment for the month of January is calculated using the straight-line method. At the time the equipment was purchased, the company estimated residual value of $4,700 and two-year service life.
2. The company estimates the future uncollectible accounts. The company determines $18,000 of accounts receivable on January 31 are past due, and 30% 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.)
3. Accrued interest expense on notes payable for January.
4. Accrued income taxes at the end of January are $13,700.
5. By the end of January, $3,700 of the gift cards sold on January 2 have been redeemed.

Required:
Record the adjusting entries on January 31 for the above transactions.

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1. Depreciation on the equipment for the month of January is calculated using the straight-line method. At the time the equipment was purchased, the company estimated residual value of $4,700 and two-year service life.

Equipment cost = 18,500 - 4,700 (residual value) = 13,800 / 24 months = $575 per month

January 31, depreciation expense

Dr Depreciation expense 575

Cr Accumulated depreciation - equipment 575

2. The company estimates the future uncollectible accounts. The company determines $18,000 of accounts receivable on January 31 are past due, and 30% 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.)

total accounts receivable Jan. 31 = 47,600 (beginning) + 142,000 - 126,100 - 5,500 + 135,000 = 193,000

overdue balance = 18,000

current accounts balance = 193,000 - 18,000 = 175,000

total bad debt = ($18,000 x 30%) + ($175,000 x 5%) = $5,400 + $8,750 = $14,150

January 31, bad debt expense

Dr Bad debt expense 14,150

Cr Allowance for doubtful accounts 14,150

3. Accrued interest expense on notes payable for January.

4. Accrued income taxes at the end of January are $13,700.

notes payable $57,000 x 6% x 1/12 = $285

January 31, interest expense

Dr Interest expense 285

Cr Interest payable 285

5. By the end of January, $3,700 of the gift cards sold on January 2 have been redeemed.

January 31, accrued revenue

Dr Unearned revenue 3,700

Cr Sales revenue 3,700

Answer from: Quest

3,500 beverages

explanation:

Answer from: Quest

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(b) management: leadership

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On January 1, 2018, the general ledger of ACME Fireworks includes the following account balances: A...

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