On January 1, 2018, the general ledger of Dynamite Fireworks includes the following account balances: Accounts Debit Credit Cash $ 23,800 Accounts Receivable 5,200 Supplies 3,100 Land 50,000 Accounts Payable 3,200 Common Stock 65,000 Retained Earning 13,900 Totals $ 82,100 $ 82,100 During January 2018, the following transactions occur: January 2. Purchase rental space for one year in advance, $6,000 ($500/month). January 9. Purchase additional supplies on account, $3,500. January 13. Provide services to customers on account, $25,500. January 17. Receive cash in advance from customers for services to be provided in the future, $3,700. January 20. Pay cash for salaries, $11,500. January 22. Receive cash on accounts receivable, $24,100. January 29. Pay cash on accounts payable, $4,000.
1. Record each of the transactions listed above
Exercise 3-21 Part 2
1. Rent for the month of January has expired.
2. Supplies remaining at the end of January total $2,800.
3. By the end of January, $3,200 of services has been provided to customers who paid in advance on January 17.
4. Unpaid salaries at the end of January are $5,800.
2. Record the adjusting entries on January 31 for the above transactions.
Exercise 3-21 Part 3
3. Prepare an adjusted trial balance as of January 31, 2018.
Exercise 3-21 Part 4
4. Prepare an income statement for the period ended January 31, 2018.
Exercise 3-21 Part 5
5. Prepare a classified balance sheet as of January 31, 2018.
Exercise 3-21 Part 6
6. Record closing entries
Exercise 3-21 Part 7
7. Analyze the following features of Dynamite Fireworks’ financial condition:
a. What is the amount of profit reported for the month of January?
b. Calculate the ratio of current assets to current liabilities at the end of January.
c. Based on Dynamite Fireworks’ profit and ratio of current assets to current liabilities, indicate whether Dynamite Fireworks appears to be in good or bad financial condition
Good
Bad