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

 

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On January 1, 2021, the general ledger of Dynamite Fireworks includes the following account balances: Accounts Debit Credit $24,400 5,800 3,700 56,000 Cash Accounts Receivable Supplies Land $ 3,800 71,000 15,100 Accounts Payable Common Stock Retained Earnings Totals $89,900 $89,900 During January 2021, the following transactions occur: 2 Purchase rental space for one year in advance, $7,800 ($650/month). 9 Purchase additional supplies on account, $4,100. January January January 13 Provide services to customers on account, $26,100. January 17 Receive cash in advance from customers for services to be provided in the future, $4,300. January 20 Pay cash for salaries, $12,100. January 22 Receive cash on accounts receivable, $24,700. January 29 Pay cash on accounts payable, $4,600. 7. Analyze the following features of Dynamite Fireworks' financial condition: a. What is the amount of profit reported for the month of January? Income statement b. Calculate the ratio of current assets to current liabilities at the end of January. Current ratio 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. Good O Bad On January 1, 2021, the general ledger of Dynamite Fireworks includes the following account balances: Accounts Debit Credit $24,400 5,800 3,700 56,000 Cash Accounts Receivable Supplies Land $ 3,800 71,000 15,100 Accounts Payable Common Stock Retained Earnings Totals $89,900 $89,900 During January 2021, the following transactions occur: 2 Purchase rental space for one year in advance, $7,800 ($650/month). 9 Purchase additional supplies on account, $4,100. January January January 13 Provide services to customers on account, $26,100. January 17 Receive cash in advance from customers for services to be provided in the future, $4,300. January 20 Pay cash for salaries, $12,100. January 22 Receive cash on accounts receivable, $24,700. January 29 Pay cash on accounts payable, $4,600. 7. Analyze the following features of Dynamite Fireworks' financial condition: a. What is the amount of profit reported for the month of January? Income statement b. Calculate the ratio of current assets to current liabilities at the end of January. Current ratio 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. Good O Bad

Answer rating: 100% (QA)

Firstly we need to calculate the account balances on January 31 after the above transactions which i... View the full answer