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Exercise $9-24($Algo$)$ Complete the accounting cycle using long$-$term liability transactions $($LO$9-2,9-8)$

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

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

During January $2024,$ the following transactions occur:

January $1$ Borrow $\backslash$$$106,000$ from Captive Credit Corporation. The installment note bears interest at $6\backslash \%$ annually and matures in $5$ years. Payments of $\backslash (\backslash$$ $2,049\backslash )$ are required at the end of each month for $60$ months.

January $4$ Receive $\backslash$$$31,600$ from customers on accounts receivable.

January $10$ Pay cash on accounts payable, $\backslash$$$17,000.$

January $15$ Pay cash for salaries, $\backslash$$$29,500.$

January $30$ Firework sales for the month total $\backslash$$$196,200.$ The cost of the units sold is $\backslash (\backslash$$ $115,500\backslash ).$

January $31$ Pay the first monthly installment of $\backslash (\backslash$$ $2,049\backslash )$ related to the $\backslash (\backslash$$ $106,000\backslash )$ borrowed on January $1.5.$ Prepare a classified balance sheet as of January $31,2024.($Amounts to be deducted should be indicated with a minus sign. Do not round intermediate calculations.$)$

Answer is not complete. Exercise $9-24($Algo$)$ 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. Do not round intermediate calculations.$)$

Journal entry worksheet

$1$

Record the entry to close the revenue accounts.

Note: Enter debits before credits. $6.$ Record closing entries. $($If no entry is required for a particular transaction$/$event$,$ select $"$No Journal Entry Required" in the first account field. Do not round intermediate calculations.$)$

Journal entry worksheet

$1$

Record the entry to close the expense accounts.

Note: Enter debits before credits. Exercise $9-24($Algo$)$ Part $7$

$7.$ Analyze the following for Freedom Fireworks:

Requirement $1$:

a$-1.$ Calculate the debt to equity ratio.

a$-2.$ If the average debt to equity ratio for the industry is $1,$ is Freedom Fireworks more or less leveraged than other companies in the same industry?

Requirement $2$:

b$-1.$ Calculate the times interest earned ratio.

b$-2.$ If the average times interest earned ratio for the industry is $20$ times, is the company more or less able to meet interest payments than other companies in the same industry?

Requirement $3$:

c$.$ Based on the ratios calculated in $($a$1.)$ and $($b$1.),$ would Freedom Fireworks be more likely to receive a higher or lower interest rate than the average borrowing rate in the industry?

Complete this question by entering your answers in the tabs below.

Calculate the debt to equity ratio.