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 Accounts $31,000 Payable 30,250 Interest Payable Cash $12,250 265 Inventory Prepaid Insurance Equipment 7,488 Notes Payable 53,000 38,760 Owner's Capital $107,498 41,983 $107,498 During January 2020, the following transactions occurred. (Morgan Company uses the perpetual inventory system.) 1. Morgan paid $265 interest on the note payable on January 1, 2020. The note is due December 31, 2021. 2. Morgan purchased $241,000 of inventory on account. 3. Morgan sold for $498,000 cash, inventory which cost $265,000. Morgan also collected $32,370 in sales taxes. 4. Morgan paid $221,000 in accounts payable. 5. Morgan paid $18,000 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 $8,800 federal income taxes are withheld. The salaries and wages are paid on February 1. Adjustment data: 8. Interest expense of $265 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 $2,940 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. Cash Inventory Prepaid Insurance Equipment Accumulated Depreciation Equipme Accounts Payable Interest Payable Salaries and Wages Payable Sales Taxes Payable FICA Taxes Payable Federal Unemployment Taxes Payat State Unemployment Taxes Payable Notes Payable Owner's Capital Sales Revenue Cost of Goods Sold Other Operating Expenses Salaries and Wages Expense interest Expense Insurance Expense DOTTIE Depreciation Expense Payroll Tax Expense x Your answer is incorrect. Try again. Prepare an income statement. (Round answers to o decimal places, e.g. 5,275.) SHERIDAN COMPANY Income Statement 100 lllll 11. Payroll Tax Expense xwwwwww II X FICA Taxes Payable x Federal Unemployment Taxes Payat| State Unemployment Taxes Payable x Your answer is incorrect. Try again. Prepare an owner's equity statement for the month ending January 31, 2020. (Round answers to 0 decimal places, e.g. 5,275.) SHERIDAN COMPANY Owner's Equity Statement x X * Your answer is incorrect. Try again. Prepare a classified balance sheet as of January 31, 2020. (List current assets in order of liquidity. Round answers to 0 deci SHERIDAN COMPANY Balance Sheet Assets X X $ Liabilities and Owner's Equity x $ x x lllllldi x x x $ x x