Exercise 3-21 Complete the accounting cycle (LO3-3, 3-4, 3-5, 3-6) [The followin

Question

Exercise 3-21 Complete the accounting cycle (LO3-3, 3-4, 3-5, 3-6)

[The following information applies to the questions displayed below.]
  

During January 2018, the following transactions occur:
  
January 2. Purchase rental space for one year in advance, $8,700 ($725/month).
January 9. Purchase additional supplies on account, $4,400.
January 13. Provide services to customers on account, $26,400.
January 17. Receive cash in advance from customers for services to be provided in the future, $4,600.
January 20. Pay cash for salaries, $12,400.
January 22. Receive cash on accounts receivable, $25,000.
January 29. Pay cash on accounts payable, $4,900.

Exercise 3-21 Part 1

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

Journal entry worksheet

Purchase rental space for one year in advance, $8,700 ($725/month).

Note: Enter debits before credits.

Exercise 3-21 Part 2

1. Rent for the month of January has expired.
2. Supplies remaining at the end of January total $3,700.
3. By the end of January, $3,875 of services has been provided to customers who paid in advance on January 17.
4. Unpaid salaries at the end of January are $5,170.

2. Record the 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.)

Journal entry worksheet

Rent for the month of January has expired.

Note: Enter debits before credits.

Exercise 3-21 Part 3

3. Prepare an adjusted trial balance as of January 31, 2018.

Exercise 3-21 Part 4

4. Prepare an income statement for the period ended January 31, 2018

Exercise 3-21 Part 5

5. Prepare a classified balance sheet as of January 31, 2018.

Exercise 3-21 Part 6

6. Record closing entries. (If no entry is required for a transaction/event, select "No journal entry required" in the first account field.)

Journal entry worksheet

Record the closing entry for revenue accounts.

Note: Enter debits before credits.

Exercise 3-21 Part 7

7. Analyze the following features of Dynamite Fireworks’ financial condition:
  
a. What is the amount of profit reported for the month of January?

b. Calculate the ratio of current assets to current liabilities at the end of January.

c. Based on Dynamite Fireworks’ profit and ratio of current assets to current liabilities, indicate whether Dynamite Fireworks appears to be in good or bad financial condition

  

  Accounts Debit Credit   Cash $ 24,700   Accounts Receivable 6,100   Supplies 4,000   Land 59,000   Accounts Payable 4,100   Common Stock 74,000   Retained Earning 15,700        Totals $ 93,800 $ 93,800

During January 2018, the following transactions occur:
  
January 2. Purchase rental space for one year in advance, $8,700 ($725/month).
January 9. Purchase additional supplies on account, $4,400.
January 13. Provide services to customers on account, $26,400.
January 17. Receive cash in advance from customers for services to be provided in the future, $4,600.
January 20. Pay cash for salaries, $12,400.
January 22. Receive cash on accounts receivable, $25,000.
January 29. Pay cash on accounts payable, $4,900.

Exercise 3-21 Part 1

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

Journal entry worksheet

Purchase rental space for one year in advance, $8,700 ($725/month).

Note: Enter debits before credits.

Date General Journal Debit Credit January 02

Exercise 3-21 Part 2

1. Rent for the month of January has expired.
2. Supplies remaining at the end of January total $3,700.
3. By the end of January, $3,875 of services has been provided to customers who paid in advance on January 17.
4. Unpaid salaries at the end of January are $5,170.

2. Record the 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.)

Journal entry worksheet

Rent for the month of January has expired.

Note: Enter debits before credits.

Date General Journal Debit Credit January 31

Exercise 3-21 Part 3

3. Prepare an adjusted trial balance as of January 31, 2018.

DYNAMITE FIREWORKS Adjusted Trial Balance January 31, 2018 Accounts Debit     Credit Totals $0 $0

Exercise 3-21 Part 4

4. Prepare an income statement for the period ended January 31, 2018

DYNAMITE FIREWORKS Income Statement For the year ended January 31, 2018 Revenues: Expenses: Total expenses 0

Exercise 3-21 Part 5

5. Prepare a classified balance sheet as of January 31, 2018.

DYNAMITE FIREWORKS Balance Sheet January 31, 2018 Assets Liabilities Total current liabilities 0 Total current assets 0 Stockholder's Equity Total stockholders' equity 0 Total assets $0 Total liabilities and stockholders' equity $0

Exercise 3-21 Part 6

6. Record closing entries. (If no entry is required for a transaction/event, select "No journal entry required" in the first account field.)

Journal entry worksheet

Record the closing entry for revenue accounts.

Note: Enter debits before credits.

Date General Journal Debit Credit January 31, 2018

Exercise 3-21 Part 7

7. Analyze the following features of Dynamite Fireworks’ financial condition:
  
a. What is the amount of profit reported for the month of January?

Income statement

b. Calculate the ratio of current assets to current liabilities at the end of January.

Current ratio

c. Based on Dynamite Fireworks’ profit and ratio of current assets to current liabilities, indicate whether Dynamite Fireworks appears to be in good or bad financial condition

- Good - Bad

Explanation / Answer

1.

2.

3.

4.

Per Chegg guidelines, 4 sub-parts have been answered.

Date General Journal Debit Credit Jan-02 Prepaid rent 8700 Cash 8700 (To record purchase of rental space in advance) Jan-09 Supplies 4400 Accounts payable 4400 (To record supplies purchased on account) Jan-13 Accounts receivable 26400 Service revenue 26400 (To record services provided on account) Jan-17 Cash 4600 Unearned service revenue 4600 (To record advance from customers for future services) Jan-20 Salaries expense 12400 Cash 12400 (To record payment of salaries) Jan-22 Cash 25000 Accounts receivable 25000 (To record collection on account) Jan-29 Accounts payable 4900 Cash 4900 (To record payment on account)

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