As of January 1, 2021, TNT Fireworks' general ledger includes the following account balances:

accounts	Debit				Credit
Money	ps	58,700
accounts receivable		25,000
Provision for Uncollectible Accounts					ps	2,200
Inventory		36,300
Notes receivable (5%, due in 2 years)		12,000
Tierra		155.000
Accounts payable						14.800
Common actions						220,000
Retained earnings						50,000
Totals	ps	287,000			ps	287,000

During January 2021, the following transactions occur:

January		1		Purchase of equipment for $19,500. The company estimates a salvage value of $1,500 and a useful life of five years.
January		4		Pay cash on accounts payable, $9,500.
January		8		Purchase of additional inventory on account, $82,900.
January		15		Receive cash in accounts receivable, $22,000.
January		19		Pay cash wages, $29,800.
January		28		Pay cash for January utilities, $16,500.
January		30		Fireworks sales for January total $220,000. All these sales are on account. The cost of units sold is $115,000.

Information for adjusting entries:

1. Equipment depreciation for the month of January is calculated using the straight-line method.
2. The company estimates future uncollectible accounts. The company determines that $3,000 of accounts receivable as of January 31 are past due and it is estimated that 50% of these accounts are uncollectible. The remaining accounts receivable as of January 31 are not past due and it is estimated that 3% of these accounts are uncollectible. (Hint: Use the accounts receivable balance as of January 31 calculated in the general ledger.)
3. 
   
4. Accrued interest income on notes receivable for January.
5. Unpaid wages at the end of January are $32,600.
6. Accrued income taxes at the end of January are $9,000.
7. 
   
8. 1. Prepare a multi-step income statement for the period ended January 31, 2021.
   2. Prepare a classified balance sheet as of January 31, 2021. (Deductible amounts must be indicated with a minus sign.)
9. 3. Record of closing entries. 
10. 4. Analyze how well TNT Fireworks manages your assets:
    a-1. Calculate the ratio of return on assets for the month of January.
11. b-1. Calculate the profit margin for the month of January. If the industry average profit margin is 4%.
    c-1. Calculate the asset turnover ratio for the month of January. If the industry average asset turnover is 0.5 times per month.

Answer rating: 100% (QA)

1 MultiStep Income Statement for the Period Ended January 31 2021 TNT Fireworks Income Statement For the Period Ended January 31 2021 Revenue Firework... View the full answer