Question

On January 1, 2021, the general ledger of ACME Fireworks includes the following account balances: Debit Credit Accounts $25,100 46,200 $ 20,000 46,000 15,000 Cash Accounts Receivable Allowance for Uncollectible Accounts 4,200 Inventory Land Equipment Accumulated Depreciation Accounts Payable Notes Payable (6%, due April 1, 2022) 1,500 28,500 50,000 35,000 Common Stock Retained Earnings 33,100 $152,300 $152,300 Totals During January 2021, the following transactions occur: 2 Sold gift cards totaling $8,000. The cards are redeemable for merchandise within one year of the purchase date. 6 Purchase additional inventory on account, $147,000 January January January 15 Firework sales for the first half of the month total $135,000. All of these sales are on account. The cost of the units sold is $73,800. January 23 Receive $125,400 from customers on accounts receivable. January 25 Pay $90,000 to inventory suppliers on accounts payable. January 28 Write off accounts receivable as uncollectible, $4,800 January 30 Firework sales for the second half of the month total $143,000. Sales include $11,000 for cash and $132,000 on account. The cost of the units sold is $79,500. January 31 Pay cash for monthly salaries, $52,000

Answer 1

4) Multi-step Income Statement:
ACME FIREWORKS
Income Statement
For the year ended January 31, 2021
Sales Revenue:
On Jan. 15 Credit Sales	$135,000
On Jan. 30 Cash Sales	$11,000
On Jan. 30 Credit Sales	$132,000
Total Sales Revenue		$278,000
Less: Cost of Goods Sold:
On Jan. 15	($73,800)
On Jan. 30	($79,500)
Total Cost of Goods Sold		($153,300)
Gross Profit		$124,700
Less: Operating Expenses:
Salaries	($52,000)
Interest Expense on Note ($50,000*6/100*1/12 months)	($250)
Total Operating Expenses		($52,250)
Net Operating Income		$72,450