Question

Required information [The following information applies to the questions displayed below.] On January 1, 2021, 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, 2022) 66,000 Common Stock 51,000 Retained Earnings 26,700 Totals $ 182,700 $ 182,700 During January 2021, the following transactions occur: January 2 Sold gift cards totaling $11,200. The cards are redeemable for merchandise within one year of the purchase date. January 6 Purchase additional inventory on account, $163,000. January 15 Firework sales for the first half of the month total $151,000. All of these sales are on account. The cost of the units sold is $81,800. January 23 Receive $127,000 from customers on accounts receivable. January 25 Pay $106,000 to inventory suppliers on accounts payable. January 28 Write off accounts receivable as uncollectible, $6,400. January 30 Firework sales for the second half of the month total $159,000. Sales include $13,000 for cash and $146,000 on account. The cost of the units sold is $87,500. January 31 Pay cash for monthly salaries, $53,600. 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 $5,000 and a two-year service life. The company estimates future uncollectible accounts. The company determines $27,000 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 4% of these accounts are estimated to be uncollectible. (Hint: Use the January 31 accounts receivable balance calculated in the general ledger.) Accrued interest expense on notes payable for January. Accrued income taxes at the end of January are $14,600. By the end of January, $4,600 of the gift cards sold on January 2 have been redeemed. 2. Record the adjusting entries on January 31 for the above transactions. (If no entry is required for a particular transaction/event, select "No Journal Entry Required" in the first account field.)

Answer 1

Date	Account Titles	Debit	Credit
2021		$	$
Jan 2	Cash	11,200
	Unearned Revenue		11,200
Jan 6	Inventory	163,000
	Accounts Payable		163,000
Jan 15	Accounts Receivable	151,000
	Sales Revenue		151,000
Jan 15	Cost of Goods Sold	81,800
	Inventory		81,800
Jan 23	Cash	127,000
	Accounts Receivable		127,000
Jan 25	Accounts Payable	106,000
	Cash		106,000
Jan 28	Allowance for Uncollectible Accounts	6,400
	Accounts Receivable		6,400
Jan 30	Cash	13,000
	Accounts Receivable	146,000
	Sales Revenue		159,000
Jan 30	Cost of Goods Sold	87,500
	Inventory		87,500
Jan 31	Salaries Expense	53,600
	Cash		53,600
Adjusting Entries
Jan 31	Depreciation Expense	750
	Accumulated Depreciation		750
Jan 31	Bad Debt Expense	16,140
	Allowance for Doubtful Accounts		16,140
Jan 31	Interest Expense	330
	Interest Payable		330
Jan 31	Income Tax Expense	14,600
	Income Taxes Payable		14,600
Jan 31	Unearned Revenue	4,600
	Sales Revenue		4,600