Exercise 3-21 Complete the accounting cycle (LO3-3, 3-4, 3-5, 3-6)

[The following information applies to the questions displayed below.]

Accounts

Debit

Credit

Cash

$

24,700

Accounts Receivable

6,100

Supplies

4,000

Land

59,000

Accounts Payable

4,100

Common Stock

74,000

Retained Earning

15,700

Totals

$

93,800

$

93,800

During January 2018, the following transactions occur: January 2. Purchase rental space for one year in advance, $8,700 ($725/month). January 9. Purchase additional supplies on account, $4,400. January 13. Provide services to customers on account, $26,400. January 17. Receive cash in advance from customers for services to be provided in the future, $4,600. January 20. Pay cash for salaries, $12,400. January 22. Receive cash on accounts receivable, $25,000. January 29. Pay cash on accounts payable, $4,900.

Exercise 3-21 Part 1

1. Record each of the transactions listed above. (If no entry is required for a transaction/event, select "No journal entry required" in the first account field.)

Journal entry worksheet

Purchase rental space for one year in advance, $8,700 ($725/month).

Note: Enter debits before credits.

Date	General Journal	Debit	Credit
January 02

Exercise 3-21 Part 2

1. Rent for the month of January has expired. 2. Supplies remaining at the end of January total $3,700. 3. By the end of January, $3,875 of services has been provided to customers who paid in advance on January 17. 4. Unpaid salaries at the end of January are $5,170.

2. Record the adjusting entries on January 31 for the above transactions. (If no entry is required for a transaction/event, select "No journal entry required" in the first account field.)

Journal entry worksheet

Rent for the month of January has expired.

Note: Enter debits before credits.

Date	General Journal	Debit	Credit
January 31

Exercise 3-21 Part 3

3. Prepare an adjusted trial balance as of January 31, 2018.

DYNAMITE FIREWORKS
Adjusted Trial Balance
January 31, 2018
Accounts	Debit	Credit
Totals	$0	$0

Exercise 3-21 Part 4

4. Prepare an income statement for the period ended January 31, 2018

DYNAMITE FIREWORKS
Income Statement
For the year ended January 31, 2018
Revenues:
Expenses:
Total expenses	0

Exercise 3-21 Part 5

5. Prepare a classified balance sheet as of January 31, 2018.

DYNAMITE FIREWORKS
Balance Sheet
January 31, 2018
Assets		Liabilities
		Total current liabilities	0
Total current assets	0	Stockholder's Equity
		Total stockholders' equity	0
Total assets	$0	Total liabilities and stockholders' equity	$0

Exercise 3-21 Part 6

6. Record closing entries. (If no entry is required for a transaction/event, select "No journal entry required" in the first account field.)

Journal entry worksheet

Record the closing entry for revenue accounts.

Note: Enter debits before credits.

Date	General Journal	Debit	Credit
January 31, 2018

Exercise 3-21 Part 7

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
-	Bad