Reference no: EM131294141

On January 1, 2018, the general ledger of TNT Fireworks includes the following account balances: Accounts Debit Credit Cash $ 58,800 Accounts Receivable 25,200 Inventory 36,400 Notes Receivable (5%, due in 2 years) 13,200 Land 156,000 Allowance for Uncollectible Accounts 2,300 Accounts Payable 14,900 Common Stock 221,000 Retained Earning 51,400 Totals $ 289,600 $ 289,600 During January 2018, the following transactions occur: January 1. Purchase equipment for $19,600. The company estimates a residual value of $1,600 and a six-year service life. January 4. Pay cash on accounts payable, $9,600. January 8. Purchase additional inventory on account, $83,900. January 15. Receive cash on accounts receivable, $22,100 January 19. Pay cash for salaries, $29,900. January 28. Pay cash for January utilities, $16,600. January 30. Firework sales for January total $221,000. All of these sales are on account. The cost of the units sold is $115,500. 1. Record each of the transactions listed above. (If no entry is required for a transaction/event, select "No journal entry required" in the first account field.) 1. Depreciation on the equipment for the month of January is calculated using the straight-line method. 2. At the end of January, $3,100 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. The note receivable of $20,100 is considered fully collectible and therefore is not included in the estimate of uncollectible accounts. 3. Accrued interest revenue on notes receivable for January. 4. Unpaid salaries at the end of January are $32,700. 5. Accrued income taxes at the end of January are $9,100 2. Record the adjusting entries on January 31 for the above transactions. (If no entry is required for a transaction/event, select "No journal entry required" in the first account field.) 3. Prepare an adjusted trial balance as of January 31, 2018. 4. Prepare a multiple-step income statement for the period ended January 31, 2018. 5. Prepare a classified balance sheet as of January 31, 2018. (Deductible amounts should be indicated with a minus sign.) 6. Record closing entries. (If no entry is required for a transaction/event, select "No journal entry required" in the first account field.) 7. Analyze how well TNT Fireworks manages its assets: Requirement 1: a-1. Calculate the return on assets ratio for the month of January. a-2. If the average return on assets for the industry in January is 2%, is the company more or less profitable than other companies in the same industry? More profitable Less profitable Requirement 2: b-1. Calculate the profit margin for the month of January. b-2. If the industry average profit margin is 5%, is the company more or less efficient at converting sales to profit than other companies in the same industry? More efficient Less efficient Requirement 3: c-1. Calculate the asset turnover ratio for the month of January. c-2. If the industry average asset turnover is 0.5% is the company more or less efficient at producing revenues with its assets than other companies in the same industry? More efficient Less efficient.