On January 1, 2018, the general ledger of TNT Fireworks includes the following account balances

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

  Accounts           Debit     Credit

  Cash    $              58,700                                                    

  Accounts Receivable                    25,000                                                    

  Inventory                          36,300                                                    

  Notes Receivable (5%, due in 2 years)                 12,000                                                    

  Land                    155,000                                                                  

  Allowance for Uncollectible Accounts                                                   $              2,200      

  Accounts Payable                                                                          14,800    

  Common Stock                                                                               220,000                  

  Retained Earning                                                                            50,000    

       Totals             $              287,000                                 $              287,000                  

During January 2018, the following transactions occur:

January 1 Purchase equipment for $19,500. The company estimates a residual value of $1,500 and a five-year service life.

January 4 Pay cash on accounts payable, $9,500.

January 8 Purchase additional inventory on account, $82,900.

January 15 Receive cash on accounts receivable, $22,000

January 19 Pay cash for salaries, $29,800.

January 28 Pay cash for January utilities, $16,500.

January 30 Firework sales for January total $220,000. All of these sales are on account. The cost of the units sold is $115,000.


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Information for adjusting entries:

1. Depreciation on the equipment for the month of January is calculated using the straight-line method.

2. At the end of January, $3,000 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 3% will not be collected. The note receivable of $12,000 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 $32,600.

5. Accrued income taxes at the end of January are $9,000.