### Account Balances as of January 1, 2021#### General Ledger of TNT Fireworks| **Accounts** | **Debit** | **Credit** ||-----------------------------------------------|------------|-------------|| Cash | $ 59,000 | || Accounts Receivable | 25,600 | || Allowance for Uncollectible Accounts | | $ 2,500 || Inventory | 36,600 | || Notes Receivable (5%, due in 2 years) | 15,600 | || Land | 158,000 | || Accounts Payable | | 15,100 || Common Stock | | 223,000 || Retained Earnings | | 54,200 || **Totals** | **$294,800**| **$294,800**|### Transactions During January 2021- **January 1:** Purchase equipment for $19,800. The company estimates a residual value of $1,800 and a six-year service life.- **January 4:** Pay cash on accounts payable, $9,800.- **January 8:** Purchase additional inventory on account, $85,900.- **January 15:** Receive cash on accounts receivable, $22,300.- **January 19:** Pay cash for salaries, $30,100.- **January 28:** Pay cash for January utilities, $16,800.- **January 30:** Sales for January total $223,000. All these sales are on account. The cost of the units sold is $116,500.### Information for Adjusting Entriesa. **Depreciation:** Equipment depreciation for January is calculated using the straight-line method.b. **Uncollectible Accounts:** - The company estimates future uncollectible accounts. - As of January 31, $3,300 of accounts receivable are past due, with 50% estimated uncollectible. - The remaining accounts are not past due, with 2% estimated uncollectible. - (Hint: Use the January 31 accounts receivable balance from the general ledger.)c. **Interest Revenue:** Accrued interest revenue on notes receivable for January.d. **Unpaid Salaries:** Unpaid 7. Analyze how well TNT Fireworks manages its assets:**Requirement 1:**a-1. Calculate the return on assets ratio for the month of January.**Return on Assets Ratio Table:**- **Choose Numerator:** - Net Income: $13,605- **Choose Denominator:** - Total Assets: $424,205- **Return on Assets Ratio Calculation:** - Return on Assets = $ \frac{\text{Net Income}}{\text{Total Assets}} $ - $ \frac{13,605}{424,205} = 3.2\% $The table displays the calculation of the Return on Assets (ROA) ratio. The numerator chosen is Net Income ($13,605), and the denominator is Total Assets ($424,205). The resulting ROA is 3.2%, indicating how efficiently the company is using its assets to generate earnings in January.

1. Return on Assets Ratio - Return on assets ratio shows the income earned by the organization from…

On January 1, 2021, the general ledger of TNT Fireworks includes the following account balances: Debit $ 59,000 Accounts Credit Cash Accounts Receivable 25,600 Allowance for Uncollectible Accounts Inventory Notes Receivable (5%, due in 2 years) Land Accounts Payable $ 2,500 36,600 15,600 158,000 15,100 Common Stock 223,000 54,200 Retained Earnings Totals $294,800 $294,800 During January 2021, the following transactions occur: January 1 Purchase equipment for $19,800. The company estimates a residual value of $1,800 and a six-year service life. January 4 Pay cash on accounts payable, $9,800. January 8 Purchase additional inventory on account, $85,900. January 15 Receive cash on accounts receivable, $22,300. January 19 Pay cash for salaries, $30,100. January 28 Pay cash for January utilities, $16,800. January 30 Sales for January total $223,000. All of these sales are on account. The cost of the units sold is $116,500. Information for adjusting entries: a. Depreciation on the equipment for the month of January is calculated using the straight-line method. b. The company estimates future uncollectible accounts. The company determines $3,300 of accounts receivable on January 31 are past due, and 50% of these accounts are estimated to be uncollectible. The remainin accounts receivable on January 31 are not past due, and 2% of these accounts are estimated to be uncollectible. (Hint: Use the January 31 accounts receivable balance calculated in the general ledger.) c. Accrued interest revenue on notes receivable for January. d. Unpaid salaries at the end of January are $32,900. e. Accrued income taxes at the end of January are $9,300.

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q