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Exercise 7-21 Complete the accounting cycle using long-term asset transactions (LO7-4, 7-7)

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[The following information applies to the questions displayed below.] On January 1, 2021, the general ledger of TNT Fireworks includes the following account balances:

Accounts	Debit				Credit
Cash	$	59,900
Accounts Receivable		27,400
Allowance for Uncollectible Accounts					$	3,400
Inventory		37,500
Notes Receivable (5%, due in 2 years)		26,400
Land		167,000
Accounts Payable						16,000
Common Stock						232,000
Retained Earnings						66,800
Totals	$	318,200			$	318,200

During January 2021, the following transactions occur:

January		1		Purchase equipment for $20,700. The company estimates a residual value of $2,700 and a six-year service life.
January		4		Pay cash on accounts payable, $10,700.
January		8		Purchase additional inventory on account, $94,900.
January		15		Receive cash on accounts receivable, $23,200.
January		19		Pay cash for salaries, $31,000.
January		28		Pay cash for January utilities, $17,700.
January		30		Sales for January total $232,000. All of these sales are on account. The cost of the units sold is $121,000.

Information for adjusting entries:

1. Depreciation on the equipment for the month of January is calculated using the straight-line method.
2. The company estimates future uncollectible accounts. The company determines $4,200 of accounts receivable on January 31 are past due, and 50% of these accounts are estimated to be uncollectible. The remaining accounts receivable on January 31 are not past due, and 3% of these accounts are estimated to be uncollectible. (Hint: Use the January 31 accounts receivable balance calculated in the general ledger.)
3. Accrued interest revenue on notes receivable for January.
4. Unpaid salaries at the end of January are $33,800.
5. Accrued income taxes at the end of January are $10,200.

rev: 11_22_2018_QC_CS-148298, 06_12_2019_QC_CS-170054

Exercise 7-21 Part 6

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

Journal entry worksheet

Note: Enter debits before credits.

Date	General Journal	Debit	Credit
January 31 2021	Sales Revenue
	Service Revenue

Note: Enter debits before credits.

Date	General Journal	Debit	Credit
January 31 2021