Question

Bulldog accrues salaries and payroll taxes on the last day of each month and pays all employment-related liabilities on the 5th day of the following month. Assume employees are in the 10% income tax bracket. Use the following tax rates: FICA OASDI, 6.2%; Medicare, 1.45%; Federal Unemployment Tax, 0.6%; and State Unemployment Tax, 5.4%.

2. Prepare and print the following financial statements: multi-step income statement for the month ended January 31, statement of retained earnings for the month ended January 31, classified balance sheet at January 31. Post to the ledger. Print a post-closing trial balance.

	Beginning		For the Month		Adjusted Trial
	Debit	Credit	Debit	Credit	Debit	Credit
Cash	$ 18,697		$ 13,808		$ 32,505
Accounts Receivable	$    3,600		$    8,250		$ 11,850
Tire Inventory	$          -		$       553		$       553
Office Supplies	$       300			$         50	$       250
Prepaid Rent	$          -		$    2,400		$    2,400
Equipment	$    3,600				$    3,600
Accumulated Depreciation		$       120				$       120
Furniture	$    6,000				$    6,000
Accumulated Depreciation		$       200				$       200
Accounts Payable		$    3,600		$    3,630		$    7,230
Unearned Oil Change Revenue		$       800	$       800			$          -
Salaries Payable		$       685	$       685	$    2,500		$    2,500
Employee Income Tax Payable		$         83	$         83			$          -
FICA OASDI Payable		$         52		$       103		$       155
FICA Medicare Payable		$         12		$         24		$         36
Federal Unemployment Tax Payable		$          -		$         15		$         15
State Unemployment Tax Payable		$          -		$       135		$       135
Bulldog Income Tax Payable		$          -				$          -
Common Stock		$ 20,000				$ 20,000
Retained Earnings		$    6,645				$    6,645
Dividends					$          -
Income Summary					$          -
Oil Change Revenue				$ 15,400		$ 15,400
Sales Revenue				$ 12,850		$ 12,850
Cost of Goods Sold			$    4,537		$    4,537
Salaries Expense			$    2,500		$    2,500
Bulldog Income Tax Expense					$          -
Rent Expense					$          -
Utilities Expense			$       700		$       700
Payroll Tax Expense			$       341		$       341
Depreciation Expense-Equipment					$          -
Depreciation Expense-Furniture					$          -
Office Supplies Expense			$         50		$         50
Total	$ 32,197	$ 32,197	$ 34,707	$ 34,707	$ 65,286	$ 65,286

Answer 1

Income Sstatement:
Sales revenue		(12850+15400)	28250
Cost of goods sold			4537
Gross margin			23713
Less: Operating expenses
Salaries expenses			2500
Utilities expenses			700
Payroll tax expenses			341
office supplies expenses			50
Net Income			20122
Statement of Retained earnings:
Beginning Balance			6645
Add: Net icnome			20122
			26767
Less: Dividend			0
Ending balance of Retained eanrings			26767
Balance Sheet:
Assets:
Current assets:
Cash		32505
Accounts receivable		11850
Tire inventory		553
office supplies		250
Prepaid eexpenses		2400
Total current assets			47558
Equipment		3600
Less: Acc. Dep		120	3480
Furniture		6000
Less: Acc. Dep		200	5800
Total Assets			56838
Liabilities and Stockholdr's equity:
Liabilities:
Accounts payable		7230
Salaries payable		2500
FICA OASDI payable		155
FICA medicare payable		36
Federal Unemployment tax payable		15
State unemployment tax payable		135
Total Liabilities			10071
Stockholder's equity
Common Stock		20000
Retained earnings		26767	46767
Total liabilities and Stockcholder's equity			56838