On June 30, 2023, the trial balance of Freedom Fireworks includes the following account balances: Accounts Debit

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Question:

On June 30, 2023, the trial balance of Freedom Fireworks includes the following account balances: Accounts Debit Credit Cash $101,200 Accounts Receivable 34,000 Allowance for Bad Debts $1,800 Merchandise Inventory 152,000 Land 67,300 Buildings 120,000 Accumulated Depreciation - Buildings 9,600 Accounts Payable 17,700 Bonds Payable (10 yr., 6%, semi-annual interest) 120,000 Discount on Bonds Payable 30,000 Common Stock 200,000 Retained Earnings 155,400 Totals $504,500 $504,500 During July, 2023, the following transactions occurred: July 1 - Borrowed $100,000 from Captive Credit Corporation. This installment note bears a 7% annual interest rate, matures in 60 months (12 payments per year times 5 years), and requires an installment payment at the end of each month. (Hint: think carefully about the rate and number of periods!) July 1 - Paid the semiannual interest on the bonds. Of note, the bonds were issued on January 1, 2023 for $90,000. Record as a compound journal entry. July 4 - Received $31,000 from customers who had previously purchased fireworks on account July 11- Paid cash on the outstanding accounts payable balance July 15 - Accrued salaries, $28,900 July 31 - Firework sales for the month totaled $195,000. The sales included $65,000 for cash and the remainder were on account. The cost of the fireworks sold was $112,500. Record as a compound journal entry. July 31 - Paid the first monthly installment related to the Jan-1 note

Required

Prepare a loan amortization schedule for the Jul-1 loan at the monthly level. What is the sum of the installment payments over the 5 years?

How much principal is paid back over the 5 years?

How much interest is paid over the 5 years?

Record each of the transactions listed above in proper journal entry format.

Prepare a multi-step income statement for the month of July, 2023. Ignore taxes. (Hint, you may want to create T-accounts and post your journal entries to ensure you have the correct account balances prior to creating the income statement).

Prepare a classified balance sheet as of July 31, 2023. (Hint, you may want to create T-accounts and post your journal entries to ensure you have the correct account balances prior to creating the balance sheet).