Required Information On January 1, 2024, the general ledger of TNT Fireworks includes the following account balances: Accounts Cash Accounts Receivable Allowance for Uncollectible Accounts Inventory Notes Receivable (5%, due in 2 years) Land Accounts Payable Connon Stock Retained Earnings Totals Debit $ 58,800 25,200 Credit $2,300 36,400 13,200 156,000 14,900 221,000 $1,400 $ 289,600 $ 289,600 During January 2024, the following transactions occur. January 1 Purchase equipment for $19,600. The company estimates a residual value of $1,600 and a six-year service life. January 4 Pay cash on accounts payable, $9,600. January & Purchase additional inventory on account, $83,900. January 15 Receive cash on accounts receivable, $22,100. January 19 Pay cash for salaries, $29,900. January 28 Pay cash for January utilities, $16,600. January 30 Firework sales for January total $221,000. All of these sales are on account. The cost of the units sold is $115,500. Information for adjusting entries: a. Depreciation on the equipment for the month of January is calculated using the straight-line method. b. The company records an adjusting entry for $3,670 for estimated future uncollectible accounts. c. The company has accrued interest on notes receivable for January d. Unpaid salaries owed to employees at the end of January are $32.700. e. The company accrued income taxes at the end of January $9,100. Analyze how well TNT Fireworks manages its assets: equirement 7a: 1. Calculate the return on assets ratio, profit margin and asset turnover ratio for the month of January. equirement 7b: 1. If the average return on assets for the industry in January is 2%, is the company more or less profitable than other companies in he same industry? 2. If the industry average profit margin is 5%, is the company more or less efficient et converting sales to profit than other companies the same industry? 3. If the industry average asset turnover is 0.5 times per month, is the company more or less efficient at producing revenues with its ssets than other companies in the same industry?

FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Required Information
On January 1, 2024, the general ledger of TNT Fireworks includes the following account balances:
Accounts
Cash
Debit
Credit
Accounts Receivable
$ 58,880
25,200
Allowance for Uncollectible Accounts
Inventory
$ 2,300
36,400
Notes Receivable (5%, due in 2 years)
13,200
Land
156,000
Accounts Payable
Common Stock
Retained Earnings
14,900
221,800
51,400
$ 289,600
$ 289,600
Totals
During January 2024, the following transactions occur.
January 1 Purchase equipment for $19,600. The company estimates a residual value of $1,600 and a six year service
life.
January 4 Pay cash on accounts payable, $9,688.
January 8 Purchase additional inventory on account, $83,980.
January 15 Receive cash on accounts receivable, $22,100.
January 19 Pay cash for salaries, $29,900.
January 28 Pay cash for January utilities, $16,600.
January 38 Firework sales for January total $221,000. All of these sales are on account. The cost of the units sold is
$115,580.
Information for adjusting entries:
a. Depreciation on the equipment for the month of January is calculated using the straight-line method.
b. The company records an adjusting entry for $3,670 for estimated future uncollectible accounts.
c. The company has accrued interest on notes receivable for January.
d. Unpaid salaries owed to employees at the end of January are $32,700.
e. The company accrued income taxes at the end of January $9,100.
7. Analyze how well TNT Fireworks manages its assets:
Requirement 7a:
-1. Calculate the return on assets ratio, profit margin and asset turnover ratio for the month of January.
Requirement 7b:
-1. If the average return on assets for the industry in January is 2%, is the company more or less profitable than other companies in
he same industry?
2. If the industry average profit margin is 5%, is the company more or less efficient at converting sales to profit than other companies
n the same industry?
-3. If the industry average asset turnover is 0.5 times per month, is the company more or less efficient at producing revenues with its
assets than other companies in the same industry?
Complete this question by entering your answers in the tabs below.
Req 7A
Req 7 B1
Req 7 B2
Req 7 83
Calculate the return on assets ratio, profit margin and asset turnover ratio for the month of January.
Return on Assets Ratio
Choose Numerator
Choose Denominator
Return on Assets Ratio
Return on Assets Ratio
Profit Margin
Choose Numerator
Choose Denominator
=
Profit Margin
Profit Margin
Asset Turnover Ratio
Choose Numerator
Choose Denominator
Reg7A
Asset Turnover Ratio
=
Asset Turnover Ratio
0 times
Req 7 81 >
Transcribed Image Text:Required Information On January 1, 2024, the general ledger of TNT Fireworks includes the following account balances: Accounts Cash Debit Credit Accounts Receivable $ 58,880 25,200 Allowance for Uncollectible Accounts Inventory $ 2,300 36,400 Notes Receivable (5%, due in 2 years) 13,200 Land 156,000 Accounts Payable Common Stock Retained Earnings 14,900 221,800 51,400 $ 289,600 $ 289,600 Totals During January 2024, the following transactions occur. January 1 Purchase equipment for $19,600. The company estimates a residual value of $1,600 and a six year service life. January 4 Pay cash on accounts payable, $9,688. January 8 Purchase additional inventory on account, $83,980. January 15 Receive cash on accounts receivable, $22,100. January 19 Pay cash for salaries, $29,900. January 28 Pay cash for January utilities, $16,600. January 38 Firework sales for January total $221,000. All of these sales are on account. The cost of the units sold is $115,580. Information for adjusting entries: a. Depreciation on the equipment for the month of January is calculated using the straight-line method. b. The company records an adjusting entry for $3,670 for estimated future uncollectible accounts. c. The company has accrued interest on notes receivable for January. d. Unpaid salaries owed to employees at the end of January are $32,700. e. The company accrued income taxes at the end of January $9,100. 7. Analyze how well TNT Fireworks manages its assets: Requirement 7a: -1. Calculate the return on assets ratio, profit margin and asset turnover ratio for the month of January. Requirement 7b: -1. If the average return on assets for the industry in January is 2%, is the company more or less profitable than other companies in he same industry? 2. If the industry average profit margin is 5%, is the company more or less efficient at converting sales to profit than other companies n the same industry? -3. If the industry average asset turnover is 0.5 times per month, is the company more or less efficient at producing revenues with its assets than other companies in the same industry? Complete this question by entering your answers in the tabs below. Req 7A Req 7 B1 Req 7 B2 Req 7 83 Calculate the return on assets ratio, profit margin and asset turnover ratio for the month of January. Return on Assets Ratio Choose Numerator Choose Denominator Return on Assets Ratio Return on Assets Ratio Profit Margin Choose Numerator Choose Denominator = Profit Margin Profit Margin Asset Turnover Ratio Choose Numerator Choose Denominator Reg7A Asset Turnover Ratio = Asset Turnover Ratio 0 times Req 7 81 >
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