On January 1, 2024, the general ledger of Big Blast Fireworks includes the following account balances: Accounts Debit Credit Cash $24,500 Accounts Receivable 43,000 Allowance for Uncollectible Accounts $2,900 Inventory 43,000 Land 81,100 Accounts Payable 28,700 Notes Payable (6 %, due in 3 years) 43,000 Common Stock 69,000 Retained Earnings 48,000 Totals $191,600 $191,600
On January 1, 2024, the general ledger of Big Blast Fireworks includes the following account balances: Accounts Debit Credit Cash $24,500 Accounts Receivable 43,000 Allowance for Uncollectible Accounts $2,900 Inventory 43,000 Land 81,100 Accounts Payable 28,700 Notes Payable (6 %, due in 3 years) 43,000 Common Stock 69,000 Retained Earnings 48,000 Totals $191,600 $191,600
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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At the end of the accounting period, a financial statement is prepared by every company, then at that time while preparing the financial statement, the company determines among its total receivable amount how much portion of receivables is collected by the company during that accounting period.
Accounts Receivable
The word “account receivable” means the payment is yet to be made for the work that is already done. Generally, each and every business sells its goods and services either in cash or in credit. So, when the goods are sold on credit account receivable arise which means the company is going to get the payment from its customer to whom the goods are sold on credit. Usually, the credit period may be for a very short period of time and in some rare cases it takes a year.
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![On January 1, 2024, the general ledger of Big Blast Fireworks includes the following account balances:
Accounts
Debit
Credit
Cash
$24,500
Accounts Receivable
43,000
Allowance for Uncollectible Accounts
$2,900
Inventory
43,000
Land
81,100
Accounts Payable
28,700
Notes Payable (6%, due in 3 years)
43,000
Common Stock
69,000
Retained Earnings
48,000
Totals
$191,600
$191,600
The $43,000 beginning balance of inventory consists of 430 units, each costing $100. During January 2024, Big Blast
Fireworks had the following inventory transactions:
January 3 Purchase 1,150 units for $121,900 on account ($106 each).
January 8 Purchase 1,250 units for $138,750 on account ($111 each)
January 12 Purchase 1,350 units for $156,600 on account ($116 each).
January 15 Return 165 of the units purchased on January 12 because of defects.
January 19 Sell 3,900 units on account for $624,000. The cost of the units sold is determined using a FIFO perpetual
inventory system.
January 22 Receive $573,000 from customers on accounts receivable.
January 24 Pay $380,000 to inventory suppliers on accounts payable.
January 27 Write off accounts receivable as uncollectible, $2,200.
January 31 Pay cash for salaries during January, $132,000.
The following information is available on January 31, 2024.
a. At the end of January, the company estimates that the remaining units of inventory purchased on January 12 are
expected to sell in February for only $100 each. [Hint: Determine the number of units remaining from January 12 after
subtracting the units returned on January 15 and the units assumed sold (FIFO) on January 19.]
b. The company records an adjusting entry for $3,750 for estimated future uncollectible accounts.
c. The company accrues interest on notes payable for January. Interest is expected to be paid each December 31.
d. The company accrues income taxes at the end of January of $13,600.
4. Prepare a multiple-step income statement for the period ended January 31, 2024.
BIG BLAST FIREWORKS
Multiple-Step Income Statement
For the Month Ended January 31, 2024](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2F8a6c8a2f-a6b8-45a6-a8ab-f7d9e54ba089%2Feb953a79-d40b-4402-abee-acd154ab7920%2Fi5lfco9_processed.jpeg&w=3840&q=75)
Transcribed Image Text:On January 1, 2024, the general ledger of Big Blast Fireworks includes the following account balances:
Accounts
Debit
Credit
Cash
$24,500
Accounts Receivable
43,000
Allowance for Uncollectible Accounts
$2,900
Inventory
43,000
Land
81,100
Accounts Payable
28,700
Notes Payable (6%, due in 3 years)
43,000
Common Stock
69,000
Retained Earnings
48,000
Totals
$191,600
$191,600
The $43,000 beginning balance of inventory consists of 430 units, each costing $100. During January 2024, Big Blast
Fireworks had the following inventory transactions:
January 3 Purchase 1,150 units for $121,900 on account ($106 each).
January 8 Purchase 1,250 units for $138,750 on account ($111 each)
January 12 Purchase 1,350 units for $156,600 on account ($116 each).
January 15 Return 165 of the units purchased on January 12 because of defects.
January 19 Sell 3,900 units on account for $624,000. The cost of the units sold is determined using a FIFO perpetual
inventory system.
January 22 Receive $573,000 from customers on accounts receivable.
January 24 Pay $380,000 to inventory suppliers on accounts payable.
January 27 Write off accounts receivable as uncollectible, $2,200.
January 31 Pay cash for salaries during January, $132,000.
The following information is available on January 31, 2024.
a. At the end of January, the company estimates that the remaining units of inventory purchased on January 12 are
expected to sell in February for only $100 each. [Hint: Determine the number of units remaining from January 12 after
subtracting the units returned on January 15 and the units assumed sold (FIFO) on January 19.]
b. The company records an adjusting entry for $3,750 for estimated future uncollectible accounts.
c. The company accrues interest on notes payable for January. Interest is expected to be paid each December 31.
d. The company accrues income taxes at the end of January of $13,600.
4. Prepare a multiple-step income statement for the period ended January 31, 2024.
BIG BLAST FIREWORKS
Multiple-Step Income Statement
For the Month Ended January 31, 2024
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