Question

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

Accounts	Debit			Credit
Cash	$	59,200
Accounts Receivable		26,000
Allowance for Uncollectible Accounts					2,700
Inventory		36,800
Notes Receivable (5%, due in 2 years)		18,000
Land		160,000
Accounts Payable					15,300
Common Stock					225,000
Retained Earning					57,000
Totals	$	300,000		$	300,000

  
During January 2018, the following transactions occur:
  
January 1. Purchase equipment for $20,000. The company estimates a residual value of $2,000 and a four-year service life.
January 4. Pay cash on accounts payable, $10,000.
January 8. Purchase additional inventory on account, $87,900.
January 15. Receive cash on accounts receivable, $22,500
January 19. Pay cash for salaries, $30,300.
January 28. Pay cash for January utilities, $17,000.
January 30. Firework sales for January total $225,000. All of these sales are on account. The cost of the units sold is $117,500.

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, $3,500 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 2% will not be collected. The note receivable of $18,000 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 $33,100.
5. Accrued income taxes at the end of January are $9,500

Answer 1