Question

Required information [The following information applies to the questions displayed below.] On January 1, 2021, the general ledger of ACME Fireworks includes the following account balances: Accounts Debit Credit Cash $ 26,700 Accounts Receivable 49,400 Allowance for Uncollectible Accounts $ 5,800 Inventory 21,600 Land 62,000 Equipment 23,000 Accumulated Depreciation 3,100 Accounts Payable 30,100 Notes Payable (6%, due April 1, 2022) 66,000 Common Stock 51,000 Retained Earnings 26,700 Totals $ 182,700 $ 182,700 During January 2021, the following transactions occur: January 2 Sold gift cards totaling $11,200. The cards are redeemable for merchandise within one year of the purchase date. January 6 Purchase additional inventory on account, $163,000. January 15 Firework sales for the first half of the month total $151,000. All of these sales are on account. The cost of the units sold is $81,800. January 23 Receive $127,000 from customers on accounts receivable. January 25 Pay $106,000 to inventory suppliers on accounts payable. January 28 Write off accounts receivable as uncollectible, $6,400. January 30 Firework sales for the second half of the month total $159,000. Sales include $13,000 for cash and $146,000 on account. The cost of the units sold is $87,500. January 31 Pay cash for monthly salaries, $53,600. 3. Prepare an adjusted trial balance as of January 31, 2021.

Answer 1

Adjusted trial balance is prepared by using unadjusted balances and adjusting them to transactions made during the year.

ACME FIREWORKS

Adjusted trial balance

	Unadjusted   Balance		Transactions		Closing   Entries		Adjusted   Balance
Accounts	Debit	Credit	Debit	Credit	Debit	Credit	Debit	Credit
Cash	26,700		151,200	159600			18,300
Accounts   Receivable	49,400		297,000	133400			213,000
Allowance   for Uncollectible Accounts		5,800						5,800
Inventory	21,600		163,000	169300			15,300
Land	62,000						62,000
Equipment	23,000						23,000
Accumulated   Depreciation		3,100						3,100
Accounts   Payable		30,100	106,000	163000				87,100
Advances   from Customers				11200				11,200
Notes   Payable (6%, due April 1, 2019)		66,000						66,000
Common   Stock		51,000						51,000
Retained   Earnings		26,700				80700		107,400
Totals	$182,700	$182,700
Income   Summary					80700	80700
Uncollectible   Accounts Expense			6400			6400
Cost of   Goods Sold			169300			169300
Salaries Expense			53600			53600
Sales				310000	310000
			946,500	946500	390,700	390,700	331,600	331,600

Working notes:

Cash Balances

Debits = 127,000 +13000 +11200 = 151,200

Credits = 106,000 + 53,600 = 159,600

Accounts receivables

Debits = 151000 +146,000 = 297,000

Credits = 127,000 +6400 = 133,400

Inventory

Debits = 163000

Credits = 81800 +87500 = 169300 (Same as cost of goods sold)