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On January 1, 2021, the general ledger of Big Blast Fireworks includes the following account balances: Accounts Cash Accounts Receivable Allowance for Uncollectible Accounts Inventory Land Accounts Payable Notes Payable (9%, due in 3 years) Common Stock Retained Earnings Totals Debit Credit $ 24,700 43,500 $ 3,100 44,000 82,600 28, 200 44,000 70,000 49,500 $194,800 $194,800 The $44,000 beginning balance of inventory consists of 440 units, each costing $100. During January 2021, Big Blast Fireworks had the following inventory transactions: January 3 Purchase 1, 250 units for $133,750 on account ($107 each). January 8 Purchase 1,350 units for $151,200 on account ($112 each). January 12 Purchase 1, 450 units for $169,650 on account ($117 each) January 15 Return 170 of the units purchased on January 12 because of defects. January 19 sell 4,200 units on account for $630,000. The cost of the units sold is determined using a FIFO perpetual inventory system. January 22 Receive $617,000 from customers on accounts receivable. January 24 Pay $420,000 to inventory suppliers on accounts payable. January 27 write oft accounts receivable as uncollectible, $2,300. January 31 Pay cash for salaries during January, $133,000. The following information is available on January 31, 2021. Exercise 6-21 Part 2 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. The company estimates future uncollectible accounts. The company determines $5,400 of accounts receivable on January 31 are past due, and 40% of these accounts are estimated to be uncollectible. The remaining accounts receivable on January 31 are not past due, and 5% of these accounts are estimated to be uncollectible. (Hint: Use the January 31 accounts receivable balance calculated in the general ledger.) 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 $13,700. 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.) Answer is complete but not entirely correct. No Date General Journal Credit Debit 2,040 1 January 31 Costs of goods sold Inventory > 2.040 2 January 31 4.600 o Bad debt expense Allowance for uncollectible accounts 4,600 On January 1, 2021, the general ledger of Big Blast Fireworks includes the following account balances: Accounts Cash Accounts Receivable Allowance for Uncollectible Accounts Inventory Land Accounts Payable Notes Payable (9%, due in 3 years) Common Stock Retained Earnings Totals Debit Credit $ 24,700 43,500 $ 3,100 44,000 82,600 28, 200 44,000 70,000 49,500 $194,800 $194,800 The $44,000 beginning balance of inventory consists of 440 units, each costing $100. During January 2021, Big Blast Fireworks had the following inventory transactions: January 3 Purchase 1, 250 units for $133,750 on account ($107 each). January 8 Purchase 1,350 units for $151,200 on account ($112 each). January 12 Purchase 1, 450 units for $169,650 on account ($117 each) January 15 Return 170 of the units purchased on January 12 because of defects. January 19 sell 4,200 units on account for $630,000. The cost of the units sold is determined using a FIFO perpetual inventory system. January 22 Receive $617,000 from customers on accounts receivable. January 24 Pay $420,000 to inventory suppliers on accounts payable. January 27 write oft accounts receivable as uncollectible, $2,300. January 31 Pay cash for salaries during January, $133,000. The following information is available on January 31, 2021. Exercise 6-21 Part 2 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. The company estimates future uncollectible accounts. The company determines $5,400 of accounts receivable on January 31 are past due, and 40% of these accounts are estimated to be uncollectible. The remaining accounts receivable on January 31 are not past due, and 5% of these accounts are estimated to be uncollectible. (Hint: Use the January 31 accounts receivable balance calculated in the general ledger.) 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 $13,700. 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.) Answer is complete but not entirely correct. No Date General Journal Credit Debit 2,040 1 January 31 Costs of goods sold Inventory > 2.040 2 January 31 4.600 o Bad debt expense Allowance for uncollectible accounts 4,600

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