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		$30,000		Accounts Payable		$12,250
Inventory		30,500		Interest Payable		300
Prepaid Insurance		6,084		Notes Payable		60,000
Equipment		38,520		Owners Capital		32,554
		$105,104				$105,104

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

1.		Morgan paid $300 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 $489,000 cash, inventory which cost $263,000. Morgan also collected $31,785 in sales taxes.
4.		Morgan paid $236,000 in accounts payable.
5.		Morgan paid $16,500 in sales taxes to the state.
6.		Paid other operating expenses of $20,500.
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 $8,700 federal income taxes are withheld. The salaries and wages are paid on February 1.

Adjustment data:

8.		Interest expense of $300 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.

A)Prepare journal entries for the transactions listed above and the adjusting entries.

B)Prepare an adjusted trial balance at January 31, 2020.

C)Prepare an income statement.

D)Prepare an owners equity statement for the month ending January 31, 2020.

E)Prepare a classified balance sheet as of January 31, 2020