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On January 1, 2018, the general ledger of Big Blast Fireworks includes the following account balances:

Accounts	Debit			Credit
Cash	$	23,100
Accounts Receivable		39,500
Inventory		36,000
Land		70,600
Allowance for Uncollectible Accounts					4,300
Accounts Payable					29,400
Notes Payable (8%, due in 3 years)					36,000
Common Stock					62,000
Retained Earnings					37,500
Totals	$	169,200		$	169,200

The $36,000 beginning balance of inventory consists of 360 units, each costing $100. During January 2018, Big Blast Fireworks had the following inventory transactions: January 3 Purchase 1,500 units for $156,000 on account ($104 each). January 8 Purchase 1,600 units for $174,400 on account ($109 each). January 12 Purchase 1,700 units for $193,800 on account ($114 each). January 15 Return 130 of the units purchased on January 12 because of defects. January 19 Sell 4,900 units on account for $735,000. The cost of the units sold is determined using a FIFO perpetual inventory system. January 22 Receive $709,000 from customers on accounts receivable. January 24 Pay $500,000 to inventory suppliers on accounts payable. January 27 Write off accounts receivable as uncollectible, $3,100. January 31 Pay cash for salaries during January, $120,000.

Record each of the transactions listed above, assuming a FIFO perpetual inventory system. (If no entry is required for a transaction/event, select "No journal entry required" in the first account field.)

a. At the end of January, the company estimates that the remaining units of inventory are expected to sell in February for only $100 each. b. At the end of January, $4,600 of accounts receivable are past due, and the company estimates that 30% of these accounts will not be collected. Of the remaining accounts receivable, the company estimates that 5% will not be collected. c. Accrued interest expense on notes payable for January. Interest is expected to be paid each December 31. d. Accrued income taxes at the end of January are $12,900. 2. Record 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.)

a. At the end of January, the company estimates that the remaining units of inventory are expected to sell in February for only $100 each. b. At the end of January, $4,600 of accounts receivable are past due, and the company estimates that 30% of these accounts will not be collected. Of the remaining accounts receivable, the company estimates that 5% will not be collected. c. Accrued interest expense on notes payable for January. Interest is expected to be paid each December 31. d. Accrued income taxes at the end of January are $12,900.

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. (Amounts to be deducted should be indicated with a minus sign.)

6. Record closing entries for revenue accounts and expense accounts

7. Analyze how well Big Blast Fireworks manages its inventory:

a-1. Calculate the inventory turnover ratio for the month of January. (Round your final answer to 1 decimal place)

a-2. If the industry average of the inventory turnover ratio for the month of January is 18.5 times, is the company managing its inventory more or less efficiently than other companies in the same industry?

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	Less

b-1. Calculate the gross profit ratio for the month of January. (Round your final answer to 1 decimal place)

b-2. If the industry average gross profit ratio is 33%, is the company more or less profitable per dollar of sales than other companies in the same industry?

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c. Is the companys strategy to sell a higher volume of less expensive items or does the company appear to be selling a lower volume of more expensive items?

	Higher volume of less expensive
	Lower volume of more expensive

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