{"id":215883,"date":"2025-05-18T04:06:52","date_gmt":"2025-05-18T04:06:52","guid":{"rendered":"https:\/\/learnexams.com\/blog\/?p=215883"},"modified":"2025-05-19T08:43:00","modified_gmt":"2025-05-19T08:43:00","slug":"the-general-ledger-of-dynamite-fireworks-includes-the-following-account-balances","status":"publish","type":"post","link":"https:\/\/www.learnexams.com\/blog\/2025\/05\/18\/the-general-ledger-of-dynamite-fireworks-includes-the-following-account-balances\/","title":{"rendered":"On January 1, 2024, the general ledger of Dynamite Fireworks includes the following account balances"},"content":{"rendered":"\n<p>On January 1, 2024, the general ledger of Dynamite Fireworks includes the following account balances:<\/p>\n\n\n\n<p>Accounts Debit Credit<br>Cash $23,800<br>Accounts Receivable 5,200<br>Supplies 3,100<br>Land 50,000<br>Accounts Payable $3,200<br>Common Stock 65,000<br>Retained Earnings 13,900<br>Totals $82,100 $82,100<br>During January 2024, the following transactions occur:<\/p>\n\n\n\n<p>January 2 Purchase rental space for one year in advance, $6,000 ($500\/month).<br>January 9 Purchase additional supplies on account, $3,500.<br>January 13 Provide services to customers on account, $25,500.<br>January 17 Receive cash in advance from customers for services to be provided in the future, $3,700.<br>January 20 Pay cash for salaries, $11,500.<br>January 22 Receive cash on accounts receivable, $24,100.<br>January 29 Pay cash on accounts payable, $4,000.<\/p>\n\n\n\n<p>Required:Record each of the transactions listed above.<br>Record the adjusting entries on January 31.<\/p>\n\n\n\n<p>Rent for the month of January has expired.<br>Supplies remaining at the end of January total $2,800. All other supplies have been used.<br>By the end of January, $3,200 of services has been provided to customers who paid in advance on January 17.<br>Unpaid salaries at the end of January are $5,800.<\/p>\n\n\n\n<p>Prepare an adjusted trial balance as of January 31, Prepare an income statement for the period ended January 31, 2Prepare a classified balance sheet as of January 31, 2024.Record closing entries.<br>Analyze the following features of Dynamite Fireworks\u2019 financial condition:<br>a. What is the amount of profit reported for the month of January?<br>b. Calculate the ratio of current assets to current liabilities (the current ratio) at the end of January.<br>c. Based on Dynamite Fireworks\u2019 profit and ratio of current assets to current liabilities, indicate whether Dynamite Fireworks appears to be in good or bad financial condition.<\/p>\n\n\n\n<ol start=\"3\" class=\"wp-block-list\">\n<li><\/li>\n<\/ol>\n\n\n\n<p><strong><mark style=\"background-color:rgba(0, 0, 0, 0)\" class=\"has-inline-color has-ast-global-color-0-color\">The Correct Answer and Explanation is:<\/mark><\/strong><\/p>\n\n\n\n<p>Here is the complete financial analysis for <strong>Dynamite Fireworks<\/strong> for January 2024:<\/p>\n\n\n\n<hr class=\"wp-block-separator has-alpha-channel-opacity\"\/>\n\n\n\n<h3 class=\"wp-block-heading\"><strong>1. Amount of Profit (Net Income) for January:<\/strong><\/h3>\n\n\n\n<p><strong>\\$6,100<\/strong><\/p>\n\n\n\n<p>This is calculated as:<\/p>\n\n\n\n<ul class=\"wp-block-list\">\n<li><strong>Service Revenue:<\/strong> \\$28,700<\/li>\n\n\n\n<li><strong>Expenses:<\/strong><\/li>\n\n\n\n<li>Rent Expense: \\$500<\/li>\n\n\n\n<li>Supplies Expense: \\$4,800<\/li>\n\n\n\n<li>Salaries Expense: \\$17,300<\/li>\n\n\n\n<li><strong>Total Expenses:<\/strong> \\$22,600<\/li>\n\n\n\n<li><strong>Net Income = Revenue &#8211; Expenses = \\$28,700 &#8211; \\$22,600 = \\$6,100<\/strong><\/li>\n<\/ul>\n\n\n\n<hr class=\"wp-block-separator has-alpha-channel-opacity\"\/>\n\n\n\n<h3 class=\"wp-block-heading\"><strong>2. Current Ratio (Liquidity Measure):<\/strong><\/h3>\n\n\n\n<p><strong>3.82<\/strong><\/p>\n\n\n\n<p>This is calculated as:<\/p>\n\n\n\n<ul class=\"wp-block-list\">\n<li><strong>Current Assets:<\/strong><\/li>\n\n\n\n<li>Cash: \\$50,100<\/li>\n\n\n\n<li>Accounts Receivable: \\$6,600<\/li>\n\n\n\n<li>Supplies: \\$1,800<\/li>\n\n\n\n<li>Prepaid Rent: \\$6,500<\/li>\n\n\n\n<li><strong>Total Current Assets = \\$65,000<\/strong><\/li>\n\n\n\n<li><strong>Current Liabilities:<\/strong><\/li>\n\n\n\n<li>Accounts Payable: \\$10,700<\/li>\n\n\n\n<li>Unearned Revenue: \\$500<\/li>\n\n\n\n<li>Salaries Payable: \\$5,800<\/li>\n\n\n\n<li><strong>Total Current Liabilities = \\$17,000<\/strong><\/li>\n<\/ul>\n\n\n\n<p><strong>Current Ratio = Current Assets \/ Current Liabilities = \\$65,000 \/ \\$17,000 \u2248 3.82<\/strong><\/p>\n\n\n\n<hr class=\"wp-block-separator has-alpha-channel-opacity\"\/>\n\n\n\n<h3 class=\"wp-block-heading\"><strong>3. Financial Health Evaluation:<\/strong><\/h3>\n\n\n\n<p>Dynamite Fireworks appears to be in <strong>good financial condition<\/strong> at the end of January 2024 based on the following:<\/p>\n\n\n\n<hr class=\"wp-block-separator has-alpha-channel-opacity\"\/>\n\n\n\n<h3 class=\"wp-block-heading\"><strong>Conclusion:<\/strong><\/h3>\n\n\n\n<p>With a solid net income and a strong current ratio, <strong>Dynamite Fireworks<\/strong> demonstrates robust financial health for January 2024. The company is well-positioned to meet its short-term obligations and continue generating profits.<\/p>\n","protected":false},"excerpt":{"rendered":"<p>On January 1, 2024, the general ledger of Dynamite Fireworks includes the following account balances: Accounts Debit CreditCash $23,800Accounts Receivable 5,200Supplies 3,100Land 50,000Accounts Payable $3,200Common Stock 65,000Retained Earnings 13,900Totals $82,100 $82,100During January 2024, the following transactions occur: January 2 Purchase rental space for one year in advance, $6,000 ($500\/month).January 9 Purchase additional supplies on account, [&hellip;]<\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"site-sidebar-layout":"default","site-content-layout":"","ast-site-content-layout":"default","site-content-style":"default","site-sidebar-style":"default","ast-global-header-display":"","ast-banner-title-visibility":"","ast-main-header-display":"","ast-hfb-above-header-display":"","ast-hfb-below-header-display":"","ast-hfb-mobile-header-display":"","site-post-title":"","ast-breadcrumbs-content":"","ast-featured-img":"","footer-sml-layout":"","ast-disable-related-posts":"","theme-transparent-header-meta":"","adv-header-id-meta":"","stick-header-meta":"","header-above-stick-meta":"","header-main-stick-meta":"","header-below-stick-meta":"","astra-migrate-meta-layouts":"default","ast-page-background-enabled":"default","ast-page-background-meta":{"desktop":{"background-color":"","background-image":"","background-repeat":"repeat","background-position":"center center","background-size":"auto","background-attachment":"scroll","background-type":"","background-media":"","overlay-type":"","overlay-color":"","overlay-opacity":"","overlay-gradient":""},"tablet":{"background-color":"","background-image":"","background-repeat":"repeat","background-position":"center center","background-size":"auto","background-attachment":"scroll","background-type":"","background-media":"","overlay-type":"","overlay-color":"","overlay-opacity":"","overlay-gradient":""},"mobile":{"background-color":"","background-image":"","background-repeat":"repeat","background-position":"center center","background-size":"auto","background-attachment":"scroll","background-type":"","background-media":"","overlay-type":"","overlay-color":"","overlay-opacity":"","overlay-gradient":""}},"ast-content-background-meta":{"desktop":{"background-color":"var(--ast-global-color-5)","background-image":"","background-repeat":"repeat","background-position":"center center","background-size":"auto","background-attachment":"scroll","background-type":"","background-media":"","overlay-type":"","overlay-color":"","overlay-opacity":"","overlay-gradient":""},"tablet":{"background-color":"var(--ast-global-color-5)","background-image":"","background-repeat":"repeat","background-position":"center center","background-size":"auto","background-attachment":"scroll","background-type":"","background-media":"","overlay-type":"","overlay-color":"","overlay-opacity":"","overlay-gradient":""},"mobile":{"background-color":"var(--ast-global-color-5)","background-image":"","background-repeat":"repeat","background-position":"center center","background-size":"auto","background-attachment":"scroll","background-type":"","background-media":"","overlay-type":"","overlay-color":"","overlay-opacity":"","overlay-gradient":""}},"footnotes":""},"categories":[25],"tags":[],"class_list":["post-215883","post","type-post","status-publish","format-standard","hentry","category-exams-certification"],"_links":{"self":[{"href":"https:\/\/www.learnexams.com\/blog\/wp-json\/wp\/v2\/posts\/215883","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.learnexams.com\/blog\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.learnexams.com\/blog\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.learnexams.com\/blog\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/www.learnexams.com\/blog\/wp-json\/wp\/v2\/comments?post=215883"}],"version-history":[{"count":0,"href":"https:\/\/www.learnexams.com\/blog\/wp-json\/wp\/v2\/posts\/215883\/revisions"}],"wp:attachment":[{"href":"https:\/\/www.learnexams.com\/blog\/wp-json\/wp\/v2\/media?parent=215883"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.learnexams.com\/blog\/wp-json\/wp\/v2\/categories?post=215883"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.learnexams.com\/blog\/wp-json\/wp\/v2\/tags?post=215883"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}