Question

On January 1, 2021, the general ledger of TNT Fireworks includes the following account balances: Credit Debit $ 59,800 27,200 $ 3,300 Accounts Cash Accounts Receivable Allowance for Uncollectible Accounts Inventory Notes Receivable (5%, due in 2 years) Land Accounts Payable Common Stock Retained Earnings Totals 37,400 25,200 166,000 15,900 231,000 65,400 $315,600 $315,600 During January 2021, the following transactions occur: January 1 Purchase equipment for $20,600. The company estimates a residual value of $2,600 and a five-year service life. January 4 Pay cash on accounts payable, $10,600. January 8 Purchase additional inventory on account, $93,900. January 15 Receive cash on accounts receivable, $23,100. January 19 Pay cash for salaries, $30,900. January 28 Pay cash for January utilities, $17,600. January 30 Sales for January total $231,000. All of these sales are on account. The cost of the units sold is $120,580. The following information is available on January 31, 2021.
a. Depreciation on the equipment for the month of January is calculated using the straight-line method.
b. The company estimates future uncollectible accounts. The company determines $4,100 of accounts receivable on January 31 are past due, and 50% of these accounts are estimated to be uncollectible. The remaining accounts receivable on January 31 are not past due, and 3% of these accounts are estimated to be uncollectible. (Hint: Use the January 31 accounts receivable balance calculated in the general ledger.)
c. Accrued interest revenue on notes receivable for January
d. Unpaid salaries at the end of January are $33,700.
e. Accrued income taxes at the end of January are $10,100.
Requirement General Journal General Ledger Trial Balance Income Statement Balance Sheet Analysis Prepare the journal entries for transactions.

Answer 1

Answer:

TNT Fireworks

Journal Entries:

January 1:

Debit Equipment $20,600

Credit Cash Account $20,600

To record the purchase of equipment.

Jan. 4

Debit Accounts Payable $10,600

Credit Cash Account $10,600

To record the payment on account.

Jan. 8

Debit Inventory $93,900

Credit Accounts Payable $93,900

To record the purchase of inventory on account.

Jan. 15

Debit Cash Account $23,100

Credit Accounts Receivable $23,100

To record the cash receipts.

Jan. 19

Debit Salaries Expense $30,900

Credit Cash Account $30,900

To record the payment for salaries.

Jan 28

Debit Utilities Expense $17,600

Credit Cash Account $17,600

To record the payment for utilities for the month.

Jan. 30

Debit Accounts Receivable $231,000

Credit Sales Revenue $231,000

To record the sales on account.

Debit Cost of Goods Sold $120,580

Credit Inventory $120,580

To record the cost of sales.

Journal for Adjusting entries:

a. Debit Depreciation Expense - Equipment $300

Credit Accumulated Depreciation - Equipment $300

To record depreciation expense for the month.

b. Debit Allowance for Doubtful Accounts $2,050

Credit Accounts Receivable $2,050

To record uncollectible 50% past due, written off.

c. Debit Uncollectibe Expense $5,742

Credit Allowance of Doubtful Accounts $5,742

To record the uncollectible expense and bring the balance of the allowance to $6,992.

d) Debit Salaries & Wages Expense $33,700

Credit Salaries & Wages Payable $33,700

To record accrued salaries.

e) Debit Income Taxes Expense $10,100

Credit Income Taxes Payable $10,100

To record accrued taxes.

Explanation:

Journal entries are made to record business transactions as they occur daily.  Journal entries help to post accounts to the general ledger where accounts are balanced.