On January 1, 2024, the general ledger of Freedom Fireworks includes the following account balances: Accounts...

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On January 1, 2024, the general ledger of Freedom Fireworks includes the following account balances: Accounts Cash Debit $ 101,200 Credit Accounts receivable 34,000 Inventory 152,000 Land 67,300 Buildings 120,000 Allowance for uncollectible accounts $ 1,800 Accumulated depreciation 9,600 17,700 120,000 30,000 200,000 155,400 Accounts payable Bonds payable Discount on bonds payable Common stock Retained earnings Totals $ 504,500 $ 504,500 During January 2024, the following transactions occurred: January 1 Borrowed $100,000 from Captive Credit Corporation. The installment note bears interest at 7% annually and matures in 5 years. Payments of $1,980 are required at the end of each month for 60 months. January 1 Called the bonds at the contractual call price of $100,000. The 6% bonds pay interest semiannually each June 30 and December 31. January 4 Received $31,000 from customers on accounts receivable. January 10 Paid cash on accounts payable, $11,000. January 15 Paid cash for salaries, $28,900. January 30 Firework sales for the month totalled $195,000. Sales included $65,000 for cash and $130,000 on account. The cost of the units sold was $112,500. January 31 Paid the first monthly installment of $1,980 related to the $100,000 borrowed on January 1. The following information is available on January 31, 2024. 1. Depreciation on the building for the month of January is calculated using the straight-line method. At the time the building was purchased, the company estimated a service life of ten years and a residual value of $24,000. 2. At the end of January, $3,000 of accounts receivable are past due, and the company estimates that 50% of these accounts will not be collected. Of the remaining accounts receivable, the company estimates that 2% will not be collected. No accounts were written off as uncollectible in January. 3. Unpaid salaries at the end of January are $26,100. 4. Accrued income taxes at the end of January are $5,000. On January 1, 2024, the general ledger of Freedom Fireworks includes the following account balances: Accounts Cash Debit $ 101,200 Credit Accounts receivable 34,000 Inventory 152,000 Land 67,300 Buildings 120,000 Allowance for uncollectible accounts $ 1,800 Accumulated depreciation 9,600 17,700 120,000 30,000 200,000 155,400 Accounts payable Bonds payable Discount on bonds payable Common stock Retained earnings Totals $ 504,500 $ 504,500 During January 2024, the following transactions occurred: January 1 Borrowed $100,000 from Captive Credit Corporation. The installment note bears interest at 7% annually and matures in 5 years. Payments of $1,980 are required at the end of each month for 60 months. January 1 Called the bonds at the contractual call price of $100,000. The 6% bonds pay interest semiannually each June 30 and December 31. January 4 Received $31,000 from customers on accounts receivable. January 10 Paid cash on accounts payable, $11,000. January 15 Paid cash for salaries, $28,900. January 30 Firework sales for the month totalled $195,000. Sales included $65,000 for cash and $130,000 on account. The cost of the units sold was $112,500. January 31 Paid the first monthly installment of $1,980 related to the $100,000 borrowed on January 1. The following information is available on January 31, 2024. 1. Depreciation on the building for the month of January is calculated using the straight-line method. At the time the building was purchased, the company estimated a service life of ten years and a residual value of $24,000. 2. At the end of January, $3,000 of accounts receivable are past due, and the company estimates that 50% of these accounts will not be collected. Of the remaining accounts receivable, the company estimates that 2% will not be collected. No accounts were written off as uncollectible in January. 3. Unpaid salaries at the end of January are $26,100. 4. Accrued income taxes at the end of January are $5,000.

Answer rating: 100% (QA)

To solve this problem we need to prepare the journal entries for the given transactions and then prepare the adjusted trial balance as of January 31 2... View the full answer