Question: On January 1, 2018, the general ledger of TNT Fireworks includes the following account balances:
| Accounts |
Debit |
Credit |
| Cash |
$ |
59,600 |
|
|
|
|
| Accounts Receivable |
|
26,800 |
|
|
|
|
| Inventory |
|
37,200 |
|
|
|
|
| Notes Receivable (5%, due in 2 years) |
|
22,800 |
|
|
|
|
| Land |
|
164,000 |
|
|
|
|
| Allowance for Uncollectible Accounts |
|
|
|
|
3,100 |
|
| Accounts Payable |
|
|
|
|
15,700 |
|
| Common Stock |
|
|
|
|
229,000 |
|
| Retained Earning |
|
|
|
|
62,600 |
|
|
|
|
|
|
|
|
| Totals |
$ |
310,400 |
|
$ |
310,400 |
|
|
|
|
|
|
|
|
|
During January 2018, the following transactions occur:
January 1. Purchase equipment for $20,400. The company estimates a residual value of $2,400 and a four-year service life.
January 4. Pay cash on accounts payable, $10,400.
January 8. Purchase additional inventory on account, $91,900.
January 15. Receive cash on accounts receivable, $22,900
January 19. Pay cash for salaries, $30,700.
January 28. Pay cash for January utilities, $17,400.
January 30. Firework sales for January total $229,000. All of these sales are on account. The cost of the units sold is $119,500.
Information for adjusting entries:
1. Depreciation on the equipment for the month of January is calculated using the straight-line method.
2. At the end of January, $3,900 of accounts receivable are past due, and the company estimates that 50% of these accounts will not be collected. Of the remaining accounts receivable, the company estimates that 3% will not be collected. The note receivable of $20,900 is considered fully collectible and therefore is not included in the estimate of uncollectible accounts.
3. Accrued interest revenue on notes receivable for January.
4. Unpaid salaries at the end of January are $33,500.
5. Accrued income taxes at the end of January are $9,900
2. Record the adjusting entries on January 31 for the above transactions.
SIDE NOTE: THE ANSWER TO PART A IS NOT 4500 AND B IS NOT 8880