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 $13,000 Cash $30,000 Accounts Payable Inventory 30,000 Interest Payable 265 Prepaid Insurance 6,540 Notes Payable 53,000 Equipment 38,520 Owner's Capital 38,795 $105,060 $105,060 DuringJanuary 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 $243,000 of inventory on account. 3. Morgan sold for $482,000 cash, inventory which cost $268,000. Morgan also collected $31,330 in sales taxes. 4. Morgan paid $220,000 in accounts payable 5. Morgan paid $16,500 in sales taxes to the state. 6. Pai d other operating expenses of $20,000 7, On January 31, 2020, the payroll for the month consists of salaries and wages of$60,000. 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 February1 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 wll 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. 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. Interest Payable 265 265 Cash 2. Inventory 243000 Accounts Payable 243000 3. Cash 513330 Sales Taxes Payable 31330 Sales Revenue 482000 (To record sales revenue.) 268000 Cost of Goods Sold 268000 Inventory (To record cost of goods sold.) 220000 4. Accounts Payable Cash 220000 5. Sales Taxes Payable 16500 Cash 16500 6. Other Operating Expenses 20000 Cash 20000 7. Salaries and Wages Expense 60000 Federal Income Taxes Payable 8900 4590 FICA Taxes Payable 46510 Salaries and Wages Payable 8 |Interest Expense 265 265 Interest Payable 9 |Insurance Expense 545 Prepaid Insurance 545 10. Depreciation Expense 590 590 Accumulated Depreciation-Equipment 11. Payroll Tax Expense 8310 FICA Taxes Payable 4590 State Unemployment Taxes Payable 3240 Federal Unemployment Taxes Payable 480 TO TEXT TO TEXT LINK TO TEXT Your answer is partially correct. Try again Prepare an adjusted trial balance at January 31, 2020. (Round answers to O decimal places, e.g.5,275.) VAUGHN COMPANY Trial Balance anuary 31, 2020 Debit Credit Cash 198000 Inventory 5000 Prepaid Insurance 5995 Equipment 38520 Accumulated Depreciation-Equipment 590 Accounts Payable 36000 265 Interest Payable Notes Payable 53000 Sales Taxes Payable 14830 46510 Salaries and Wages Payable Federal Income Taxes Payable 8900 FICA Taxes Payable 9180 State Unemployment Taxes Payable 3240 Federal Unemployment Taxes Payable 480 Owner's Capital 38795 Sales Revenue 482000 Cost of Goods Sold 268000 Other Operating Expenses 20000 Salaries and Wages Expense 60000 Interest Expense 265 Insurance Expense 545 545 Insurance Expense 590 Depreciation Expense 8310 Payroll Tax Expense Total Your answer is incorrect. Try again. Prepare an income statement. (Round answers to 0 decimal places, e.g. 5,275.) VAUGHN COMPANY Income Statement [ VAUGHN COMPANY Balance Sheet Assets Liabilities and Owner's Equity