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

MORGAN COMPANY Balance Sheet December 31, 2019 Cash $31,000 Accounts Payable $13,750 Inventory 30,750 Interest Payable 278 Prepaid Insurance 7,380 Notes Payable 55,500 Equipment 37,800 Owners Capital 37,402 $106,930 $106,930

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

1. Morgan paid $278 interest on the note payable on January 1, 2020. The note is due December 31, 2021. 2. Morgan purchased $240,000 of inventory on account. 3. Morgan sold for $487,000 cash, inventory which cost $260,000. Morgan also collected $31,655 in sales taxes. 4. Morgan paid $227,000 in accounts payable. 5. Morgan paid $15,000 in sales taxes to the state. 6. Paid other operating expenses of $19,000. 7. On January 31, 2020, the payroll for the month consists of salaries and wages of $58,000. All salaries and wages are subject to 7.65% FICA taxes. A total of $8,900 federal income taxes are withheld. The salaries and wages are paid on February 1.

Adjustment data:

8. Interest expense of $278 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 $3,060 salvage value. 11. Employers payroll taxes include 7.65% FICA taxes, a 5.4% state unemployment tax, and an 0.8% federal unemployment tax.

Prepare journal entries for the transactions listed above and the adjusting entries. (Credit account titles are automatically indented when amount is entered. Do not indent manually. Round answers to 0 decimal places, e.g. 5,275.)

No. Account Titles and Explanation Debit Credit 1.

2.

3.

(To record sales revenue.)

(To record cost of goods sold.) 4.

5.

6.

7.

8.

9.

10.

11.

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

LILY COMPANY Trial Balance

Debit Credit

$ $

Total $ $

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Prepare an income statement. (Round answers to 0 decimal places, e.g. 5,275.)

LILY COMPANY Income Statement

$

$

$

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Prepare an owners equity statement for the month ending January 31, 2020. (Round answers to 0 decimal places, e.g. 5,275.)

LILY COMPANY Owners Equity Statement

$ :

$

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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.)

LILY COMPANY Balance Sheet

Assets

$

$

:

$ Liabilities and Owner's Equity

$

$

$