On January 1, 2021, the general ledger of Freedom Fireworks includes the following account
AccountsDebit Credit Cash$102,500 Accounts Receivable 36,600 Inventory 153,300 Land 80,300 Buildings 133,000 Allowance for Uncollectible Accounts $3,100 Accumulated Depreciation 10,900 Accounts Payable 32,000 Bonds Payable 133,000 Discount on Bonds Payable 31,300 Common Stock 213,000 Retained Earnings 145,000 Totals$537,000 $537,000
During January 2021, the following transactions occurred:
January 1 Borrowed $113,000 from Captive Credit Corporation. The installment note bears interest at 6% annually and matures in 5 years. Payments of $2,184.61 are required at the end of each month for 60 months.January 1 Called the bonds at the contractual call price of $113,000. The 6% bonds pay interest semiannually each June 30 and December 31.January 4 Received $32,300 from customers on accounts receivable.January 10 Paid cash on accounts payable, $24,000.January 15 Paid cash for salaries, $30,200.January 30 Firework sales for the month totaled $201,200. Sales included $66,300 for cash and $134,900 on account. The cost of the units sold was $119,000.January 31 Paid the first monthly installment of $2,185 related to the $113,000 borrowed on January 1. Round your interest calculation to the nearest dollar.
The following information is available on January 31, 2021.
- Depreciation on the building for the month of January is calculated using the straight-line method. At the time the building was purchased, the company estimated a service life of 10 years and a residual value of $26,800.
- At the end of January, $4,300 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 2% will not be collected. No accounts were written off as uncollectible in January.
- Unpaid salaries at the end of January are $27,400.
- Accrued income taxes at the end of January are $6,300.
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