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Accounting Cycle Review 11-01 a,b, c1-c3 Morgan Company’s balance sheet at December 31, 2019, is presented...

Accounting Cycle Review 11-01 a,b, c1-c3

Morgan Company’s balance sheet at December 31, 2019, is presented below.

MORGAN COMPANY
Balance Sheet
December 31, 2019
Cash $31,500 Accounts Payable $12,500
Inventory 30,750 Interest Payable 233
Prepaid Insurance 5,808 Notes Payable 46,500
Equipment 37,800 Owner’s Capital 46,625
$105,858 $105,858


During January 2020, the following transactions occurred. (Morgan Company uses the perpetual inventory system.)

1. Morgan paid $233 interest on the note payable on January 1, 2020. The note is due December 31, 2021.
2. Morgan purchased $243,000 of inventory on account.
3. Morgan sold for $491,000 cash, inventory which cost $261,000. Morgan also collected $31,915 in sales taxes.
4. Morgan paid $234,000 in accounts payable.
5. Morgan paid $15,000 in sales taxes to the state.
6. Paid other operating expenses of $21,000.
7. On January 31, 2020, the payroll for the month consists of salaries and wages of $56,000. All salaries and wages are subject to 7.65% FICA taxes. A total of $8,500 federal income taxes are withheld. The salaries and wages are paid on February 1.


Adjustment data:

8. Interest expense of $233 has been incurred on the notes payable.
9. The insurance for the year 2020 was prepaid on December 31, 2019.
10. The equipment was acquired on December 31, 2019, and will be depreciated on a straight-line basis over 5 years with a $3,120 salvage value.
11. Employer’s payroll taxes include 7.65% FICA taxes, a 5.4% state unemployment tax, and an 0.8% federal unemployment tax.

1. Prepare an adjusted trial balance at January 31, 2020. (Round answers to 0 decimal places, e.g. 5,275.)
2. Prepare an income statement. (Round answers to 0 decimal places, e.g. 5,275.)

3. Prepare an owner’s equity statement for the month ending January 31, 2020. (Round answers to 0 decimal places, e.g. 5,275.)
4. Prepare a classified balance sheet as of January 31, 2020. (List current assets in order of liquidity. Round answers to 0 decimal places, e.g. 5,275.)

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ekkarill92 answered 1 year ago
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