Question

In: Accounting

On January 1, 2021, the general ledger of ACME Fireworks includes the following account balances: Accounts...

On January 1, 2021, the general ledger of ACME Fireworks includes the following account balances:

Accounts Debit Credit
Cash $ 25,500
Accounts Receivable 47,000
Allowance for Uncollectible Accounts $ 4,600
Inventory 20,400
Land 50,000
Equipment 17,000
Accumulated Depreciation 1,900
Accounts Payable 28,900
Notes Payable (6%, due April 1, 2022) 54,000
Common Stock 39,000
Retained Earnings 31,500
Totals $ 159,900 $ 159,900

During January 2021, the following transactions occur:

January 2 Sold gift cards totaling $8,800. The cards are redeemable for merchandise within one year of the purchase date.
January 6 Purchase additional inventory on account, $151,000.
January 15 Firework sales for the first half of the month total $139,000. All of these sales are on account. The cost of the units sold is $75,800.
January 23 Receive $125,800 from customers on accounts receivable.
January 25 Pay $94,000 to inventory suppliers on accounts payable.
January 28 Write off accounts receivable as uncollectible, $5,200.
January 30 Firework sales for the second half of the month total $147,000. Sales include $12,000 for cash and $135,000 on account. The cost of the units sold is $81,500.
January 31 Pay cash for monthly salaries, $52,400.

4. Prepare a multiple-step income statement for the period ended January 31, 2021.

5. Prepare a classified balance sheet as of January 31, 2021.

6. Record closing entries.

7. Analyze the following for ACME Fireworks
  

Requirement 1:

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

a-2. If the average current ratio for the industry is 1.80, is ACME Fireworks more or less liquid than the industry average?

  • More liquid

  • Less liquid


Requirement 2:  

b-1. Calculate the acid-test ratio at the end of January.
  

b-2. If the average acid-test ratio for the industry is 1.50, is ACME Fireworks more or less likely to have difficulty paying its currently maturing debts (compared to the industry average)?

  • More likely

  • Less likely


Requirement 3:

c-1. Assume the notes payable were due on April 1, 2021, rather than April 1, 2022. Calculate the revised current ratio at the end of January.
  

c-2. Indicate whether the revised ratio would increase, decrease, or remain unchanged.

  • Decrease the current ratio

  • Increase the current ratio

  • Remain unchanged

Solutions

Expert Solution

ekkarill92 answered 2 years ago
Next > < Previous

Related Solutions

On January 1, 2021, the general ledger of ACME Fireworks includes the following account balances: Accounts...
On January 1, 2021, the general ledger of ACME Fireworks includes the following account balances: Accounts Debit Credit Cash $ 25,500 Accounts Receivable 47,000 Allowance for Uncollectible Accounts $ 4,600 Inventory 20,400 Land 50,000 Equipment 17,000 Accumulated Depreciation 1,900 Accounts Payable 28,900 Notes Payable (6%, due April 1, 2022) 54,000 Common Stock 39,000 Retained Earnings 31,500 Totals $ 159,900 $ 159,900 During January 2021, the following transactions occur: January 2 Sold gift cards totaling $8,800. The cards are redeemable for...
On January 1, 2021, the general ledger of ACME Fireworks includes the following account balances: Accounts...
On January 1, 2021, the general ledger of ACME Fireworks includes the following account balances: Accounts Debit Credit Cash $ 25,700 Accounts Receivable 47,400 Allowance for Uncollectible Accounts $ 4,800 Inventory 20,600 Land 52,000 Equipment 18,000 Accumulated Depreciation 2,100 Accounts Payable 29,100 Notes Payable (6%, due April 1, 2022) 56,000 Common Stock 41,000 Retained Earnings 30,700 Totals $ 163,700 $ 163,700 During January 2021, the following transactions occur: January 2 Sold gift cards totaling $9,200. The cards are redeemable for...
On January 1, 2021, the general ledger of ACME Fireworks includes the following account balances: Accounts...
On January 1, 2021, the general ledger of ACME Fireworks includes the following account balances: Accounts Debit Credit Cash $ 27,100 Accounts Receivable 50,200 Allowance for Uncollectible Accounts $ 6,200 Inventory 22,000 Land 66,000 Equipment 25,000 Accumulated Depreciation 3,500 Accounts Payable 30,500 Notes Payable (6%, due April 1, 2022) 70,000 Common Stock 55,000 Retained Earnings 25,100 Totals $ 190,300 $ 190,300 During January 2021, the following transactions occur: January 2 Sold gift cards totaling $12,000. The cards are redeemable for...
On January 1, 2021, the general ledger of ACME Fireworks includes the following account balances:
  On January 1, 2021, the general ledger of ACME Fireworks includes the following account balances: Accounts Debit   Credit   Cash $ 26,400             Accounts Receivable   48,800             Allowance for Uncollectible Accounts         $ 5,500     Inventory   21,300             Land   59,000             Equipment   21,500             Accumulated...
On January 1, 2018, the general ledger of ACME Fireworks includes the following account balances: Accounts...
On January 1, 2018, the general ledger of ACME Fireworks includes the following account balances: Accounts Debit Credit Cash $ 35,500 Accounts Receivable 50,200 Inventory 22,000 Land 86,000 Equipment 25,000 Allowance for Uncollectible Accounts 6,200 Accumulated Depreciation 3,500 Accounts Payable 30,500 Notes Payable (6%, due April 1, 2019) 70,000 Warranty Liability 26,000 Common Stock 55,000 Retained Earnings 27,500 Totals $ 218,700 $ 218,700 During January 2018, the following transactions occur: January 2 Sold gift cards totaling $12,000. The cards are...
On January 1, 2018, the general ledger of ACME Fireworks includes the following account balances:   Accounts...
On January 1, 2018, the general ledger of ACME Fireworks includes the following account balances:   Accounts Debit Credit   Cash $ 27,100   Accounts Receivable 50,200   Allowance for Uncollectible Accounts $ 6,200   Inventory 22,000   Land 66,000   Equipment 25,000   Accumulated Depreciation 3,500   Accounts Payable 30,500   Notes Payable (6%, due April 1, 2019) 70,000   Common Stock 55,000   Retained Earnings 25,100        Totals $ 190,300 $ 190,300 During January 2018, the following transactions occur: January 2 Sold gift cards totaling $12,000. The cards are redeemable for...
On January 1, 2018, the general ledger of ACME Fireworks includes the following account balances: Accounts...
On January 1, 2018, the general ledger of ACME Fireworks includes the following account balances: Accounts Debit Credit Cash $ 25,100 Accounts Receivable 46,200 Allowance for Uncollectible Accounts $ 4,200 Inventory 20,000 Land 46,000 Equipment 15,000 Accumulated Depreciation 1,500 Accounts Payable 28,500 Notes Payable (6%, due April 1, 2019) 50,000 Common Stock 35,000 Retained Earnings               33,100 Totals $152,300 $152,300 During January 2018, the following transactions occur: January 2 Sold gift cards totaling $8,000. The cards are redeemable for merchandise...
On January 1, 2018, the general ledger of ACME Fireworks includes the following account balances: Accounts...
On January 1, 2018, the general ledger of ACME Fireworks includes the following account balances: Accounts Debit Credit Cash $ 26,700 Accounts Receivable 49,400 Allowance for Uncollectible Accounts $ 5,800 Inventory 21,600 Land 62,000 Equipment 23,000 Accumulated Depreciation 3,100 Accounts Payable 30,100 Notes Payable (6%, due April 1, 2019) 66,000 Common Stock 51,000 Retained Earnings 26,700 Totals $ 182,700 $ 182,700 During January 2018, the following transactions occur: January 2. Sold gift cards totaling $11,200. The cards are redeemable for...
On January 1, 2021, the general ledger of Freedom Fireworks includes the following account balances: Accounts...
On January 1, 2021, the general ledger of Freedom Fireworks includes the following account balances: Accounts Debit Credit Cash $ 101,500 Accounts Receivable 34,600 Inventory 152,300 Land 70,300 Buildings 123,000 Allowance for Uncollectible Accounts $ 2,100 Accumulated Depreciation 9,900 Accounts Payable 21,000 Bonds Payable 123,000 Discount on Bonds Payable 30,300 Common Stock 203,000 Retained Earnings 153,000 Totals $ 512,000 $ 512,000 During January 2021, the following transactions occurred: January 1 Borrowed $103,000 from Captive Credit Corporation. The installment note bears...
On January 1, 2021, the general ledger of Freedom Fireworks includes the following account balances: Accounts...
On January 1, 2021, the general ledger of Freedom Fireworks includes the following account balances: Accounts Debit Credit Cash $ 102,700 Accounts Receivable 37,000 Inventory 153,500 Land 82,300 Buildings 135,000 Allowance for Uncollectible Accounts $ 3,300 Accumulated Depreciation 11,100 Accounts Payable 34,200 Bonds Payable 135,000 Discount on Bonds Payable 31,500 Common Stock 215,000 Retained Earnings 143,400 Totals $ 542,000 $ 542,000 During January 2021, the following transactions occurred: January 1 Borrowed $115,000 from Captive Credit Corporation. The installment note bears...
ADVERTISEMENT
Subjects
ADVERTISEMENT
Latest Questions
ADVERTISEMENT