Question

No	Date	Account Title	Debit	Credit
1	Jan 02	Prepaid Rent	6,300
		Cash		6,300
2	Jan 09	Supplies	3,600
		Accounts Payable		3,600
3	Jan 13	Accounts Receivable	25,600
		Service Revenue		25,600
4	Jan 17	Cash	3,800
		Deferred Revenue		3,800
5	Jan 20	Salaries Expense	11,600
		Cash		11,600
6	Jan 22	Cash	24,200
		Accounts Receivable		24,200
7	Jan 29	Accounts Payable	4,100
		Cash		4,100
8	Jan 31	Rent Expense	525
		Prepaid Rent		525
9	Jan 31	Supplies Expense	3,900
		Supplies		3,900
10	Jan 31	Deferred Revenue	3,275
		Service Revenue		3,275
11	Jan 31	Salaries Expense	5,730
		Salaries Payable		5,730
12	Jan 31	Service Revenue	28,875
		Retained Earnings		28,875
13	Jan 31	Retained Earnings	21,755
		Salaries Expense		17,330
		Rent Expense		525
		Supplies Expense		3,900

PLEASE HELP FILLING OUT THE ANALYSIS TAB

Using the information from the requirements above, complete the 'Analysis' tab.

Analyze the following features of Dynamite Fireworks’ financial condition: (a) What is the amount of profit reported for the month of January? The amount of profit reported for the month of January is (b) Calculate the ratio of current assets to current liabilities at the end of January. The ratio of current assets to current liabilities at the end of January is (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. Does the company appears to be in good or bad financial condition? Good

Answer 1

Solution:-

Working -

Dynamite Fireworks
Income Statement
For the year ended January 31
Revenues:
Service Revenue	$28,875
Total Revenue	$28,875
Expenses:
Salaries expenses	$17,330
Rent Expenses	$525
Supplies Expense	$3,900
Total expenses	$21,755
Net Income	$7,120

Dynamite Fireworks
Statement of Retained Earnings
For the year ended January 31
Retained Earnings,January 1	$21,755
Add: Net Income	$7,120
Retained Earnings,January 31	$28,875

Assets	Amount	Liabilities	Amount
Current Assets		Current Liabilities
Cash	$28,000	Accounts Payable	$3,600
Accounts Receivable	$25,600	Salaries Payable	$5,750
Supplies	$3,600	Deferred Revenue	$525
Prepaid Rent	$6,300
Total Asssets	$63,500	Total Current Liabilities	$9,875

(a) The amount of profit reported for the month of January is $7,120

(b) 6.00

= Current Assets / Current Liabilities

= $ 63,500/ $9,875

(c) Financial condition of Dynamite Fireworks appears to be Good