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Answer:
uncollectible amount expense 1,040 debit
allowance for uncollectible amount 1,040 credit
supplies expense 3,450 debit
supplies 3,450 credit
interest receivables 110 debit
interest revenue 110 credit
salaries expense 35,300 debit
salaries payable 35,300 credit
Explanation:
Accounts Receivables 15,400
during the year 90,400
write-off (4,100)
collected 88,000
ending balance 13,700
due amounts 4,700 x 20% chance = 940
remaining 8,000 x 5% = 400
total allowance 1,340
balance of the allowance
4,400 - 4,100 writ-off = 300
adjustment needed 1,340 - 300 = 1,040
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supplies 4,300 ending supplies 850
the difference is the amount used thus, the expense
supplies expense 3,450
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principal x time x interest
22,000 x 1 /12 x 6% =
22,000 x 0.5% = 110
as we are not receiving the interest now, we generate a receivable
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we reocgnize the expense and the payable associated with salaries
1. 3D Family Fireworks Income Statement
For the month ended January 31, 2021
Service Revenue $143,500
Interest Revenue 110
Salaries Expenses 68,500
Utilities Expense 15,500
Supplies Expense 3,450
Bad Debt Expense 1,090 (88,540)
Net income $55,070
2. 3D Family Fireworks Balance Sheet
As of January 31, 2021
Cash $112,600
Accounts Receivable 13,700
Allowance for
Uncollectible Accounts (1,390)
Supplies 850
Accrued Interest Revenue 110
Total current assets $125,870
Notes Receivable
(6%, due in 2 years) 22,000 $22,000
Long-term assets:
Land 80,700 $80,700
Total assets $228,570
Current Liabilities:
Accounts Payable 2,000
Salaries Payable 35,300
Total liabilities $37,300
Equity:
Common Stock 102,000
Retained Earnings 89,270
Total equity $191,270
Total liabilities and equity $228,570
3.a. Accounts Receivable Turnover Ratio = 9.9 times ($143,500/$14,550)
Average Receivable = $14,550 (13,700 + 15,400)/2
3.b. The Accounts Receivable Turnover Ratio of 9.9 times shows that 3D Family Fireworks is efficient in collecting debts from its customers. Its collection is better than the industry's average of 5.3 times.
3.c. Ratio of Uncollectible Accounts to Accounts Receivable for January 31 = 10%
= 9.86% ($1,390/$13,700 x 100).
January 1: Ratio = 29%
= 28.6% ($4,400/$15,400 x 100).
3D Family Fireworks improved in cash collections from its customers at January 31 when compared to its performance at January 1. The ratio of uncollectible for January 31 was 10% while the ratio of uncollectible for January 1 was 29% of its accounts receivable.
Data and Calculations:
3D Family Fireworks
General Ledger Balances
As at January 1, 2021:
Account Titles Debit Credit
Cash $27,500
Accounts Receivable 15,400
Allowance for Uncollectible Accounts $ 4,400
Supplies 4,300
Notes Receivable
(6%, due in 2 years) 22,000
Land 80,700
Accounts Payable 9,300
Common Stock 102,000
Retained Earnings 34,200
Totals $149,900 $149,900
General Ledger Balances
As at January 1, 2021:
Account Titles Debit Credit
Cash $112,600 (27,500 + 53,100 - 33,200 + 88,000 - 7,300 - 15,500)
Accounts Receivable 13,700 (15,400 + 90,400 - 4,100 - 88,000)
Allowance for Uncollectible Accounts $1,390 (4,400 - 4,100 + 1,090)
Supplies 850 (4,300 - 3,450)
Notes Receivable
(6%, due in 2 years) 22,000
Accrued Interest Revenue 110
Interest Revenue 110
Land 80,700
Accounts Payable 2,000 (9,300 - 7,300)
Salaries Payable 35,300
Common Stock 102,000
Retained Earnings 34,200
Service Revenue 143,500 ($53,100 + 90,400
Salaries Expenses 68,500 (33,200 + 35,300)
Utilities Expense 15,500
Supplies Expense 3,450
Bad Debt Expense 1,090
Totals $318,500 $318,500
Adjusted Trial Balance
As at January 31, 2021:
Account Titles Debit Credit
Cash $112,600
Accounts Receivable 13,700
Allowance for Uncollectible Accounts $1,390
Supplies 850
Notes Receivable
(6%, due in 2 years) 22,000
Accrued Interest Revenue 110
Land 80,700
Accounts Payable 2,000
Salaries Payable 35,300
Common Stock 102,000
Retained Earnings 34,200
Service Revenue 143,500
Interest Revenue 110
Salaries Expenses 68,500
Utilities Expense 15,500
Supplies Expense 3,450
Bad Debt Expense 1,090
Totals $318,500 $318,500
Analysis of Transactions:
January 2 Cash $53,100 Service Revenue $53,100
January 6 Accounts Receivable $90,400 Service Revenue $90,400
January 15 Allowance for Uncollectible Accounts $4,100 Accounts Receivable $4,100
January 20 Salaries Expenses $33,200 Cash $33,200
January 22 Cash $88,000 Accounts receivable, $88,000
January 25 Accounts Payable, $7,300 Cash $7,300
January 30 Utilities Expense $15,500 Cash $15,500
Adjusting Entries:
a. Past due $4,700 of accounts receivable Uncollectible 20% = $940 ($4,700 x 20%)
Uncollectible 5% = $450 ( 9,000 x 5%)
Total Estimated Uncollectible = $1,390 ($940 + $450)
b. Ending Supplies $850
Supplies Expense $3,450 ($4,300 - $850)
c. Accrued Interest Revenue $ 110 ($22,000 x 6% x 1/12)
d. Salaries Expense $35,300 Salaries Payable $35,300
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