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

Accounts	Debit	Credit
Cash	26,200
Accounts Receivable	48,400
Allowance for Uncollectible Accounts		5,300
Inventory	21,100
Land	57,000
Equipment	20,500
Accumulated Depreciation		2,600
Accounts Payable		29,600
Notes Payable (6% due April 1, 2019)		61,000
Common Stock		46,000
Retained Earnings		28,700
Totals	$173,200	$173,200

During January 2018, the following transactions occur: January 2. Sold gift cards totaling $10,200. The cards are redeemable for merchandise within one year of the purchase date. January 6. Purchase additional inventory on account, $158,000. January 15. Firework sales for the first half of the month total $146,000. All of these sales are on account. The cost of the units sold is $79,300. January 23. Receive $126,500 from customers on accounts receivable. January 25. Pay $101,000 to inventory suppliers on accounts payable. January 28. Write off accounts receivable as uncollectible, $5,900. January 30. Firework sales for the second half of the month total $154,000. Sales include $17,000 for cash and $137,000 on account. The cost of the units sold is $85,000. January 31. Pay cash for monthly salaries, $53,100.

Questions:

1. Record each of the transactions listed above.

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 a residual value of $4,300 and a two-year service life. At the end of January, $22,000 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 3% will not be collected. Accrued interest expense on notes payable for January. Accrued income taxes at the end of January are $14,100. By the end of January, $4,100 of the gift cards sold on January 2 have been redeemed.

2. Record the adjusting entries on January 31 for the above transactions.

a. Record the depreciation for the month of January.

b. Record bad debts at the end of January.

c. Accrued interest expense on notes payable for January.

d. Accrued income taxes at the end of January are $14,100.

e. By the end of January, $4,100 of the gift cards sold on January 2 have been redeemed.

3. Prepare an adjusted trial balance as of January 31, 2018.

4. Prepare a multiple-step income statement for the period ended January 31, 2018.

5. Prepare a classified balance sheet as of January 31, 2018.

6. Record closing entries.

a. Record the closing entry for revenue accounts.

b. Record the closing entry for expense accounts.

7. Analyze the following for ACME Fireworks

Requirement 1:

a-1. Calculate the current ratio at the end of January.

		Current Ratio
Choose Numerator	/	Choose Denominator	=	Current Ratio
	/		=	Current Ratio
	/		=

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