Comp 13-1 (similar to) The Kinston Company is a retail company that began operations on October 1, 2018, when it incorporated in the state of North Carolina. The Kinston Company is authorized to issue 300,000 shares of $1 par value common stock and 65,000 shares of 7%, 360 par value preferred stock. The company sells a product that includes a one-year warranty and records estimated warranty payable each month. Customers are charged a 6% state sales tax The company uses a perpetual inventory system. There are three employees that are paid a monthly salary on the last day of the month. Requirement fa in preparation for recording the transactions, prepare: An amortization schedule for the first 3 months of the mortgage payable issued on O Beginning Principal Interest Total Ending Balance Payment Expense Payment Balance 10/01/2018 11/1/2018 12/1/2018 01/01/2010 13 p. 726 1 of 1 (0 complete) Requirements 1. In preparation for recording the transactions, prepare: An amortization schedule for the first 3 months of the mortgage payable issued on October 1. Round interest calculations to the nearest dollar b. Payroll registers for October, November, and December. All employees worked October 1 through December 31 and are subject to the following FICA taxes: OASDI: 6.2% on first $118,500 earned, Medicare: 1.45% up to $200,000, 2.35% on earnings above $200,000. Additional payroll information includes: Monthly Federal Health Employee Salary Income Tax Insurance Keirsten Jordan $ 5,800 S 1.740 $ 200 Mabel Schaefer 4.000 980 200 Shannon Mitchell 3.300 495 200 Calculations for employer payroll taxes liabilities for October November, and December: OASDI: 6.2% on first $118.500 eamed: Medicare 1.459. SUTA: 5.4% on first $7.000 earned: FUTA: 0.0% on first 57,000 earned 2. Record the transactions in the general journal. Omit explanations 3. Post to the general ledger 4. Record adjusting entries for the three month period ended December 31, 2018 a Depreciation on the Building, straight-line. 40 years, no residual value. b. Depreciation on Store Fixtures, straight-line 20 years, no residual value. c. Accrued interest expense on the note payable for the store fixtures. d. Accrued interest expense on the mortgage payable. Accrued income tax expense of $31,000 5. Post adjusting entries and prepare an adjusted trial balance 6. Prepare a multi-step income statement and statement of retained earnings for the quarter ended December 31, 2018. Prepare a classified balance sheet as of December 31, 2018. Assume that $16.070 of the mortgage payable is due within the next year 7 Evaluate the company's success for the first quarter of operations by calculating the following ratios. The market price of the common stock is 530 on December 31, 2018. Round to two decimal places Print Done Clear All Requirements - X Shannon Mitchell 3,300 495 200 Calculations for employer payroll taxes liabilities for October November, and December: QASDI: 6.2% on first $118,500 eamed, Medicare: 1.45%; SUTA: 5.4% on first $7,000 eamed; FUTA: 0.6% on first $7.000 earned. 2 Record the transactions in the general journal. Omit explanations 3. Post to the general ledger 4. Record adjusting entries for the three month period ended December 31, 2018: a Depreciation on the Building straight-line. 40 years, no residual value. b. Depreciation on Store Fixtures, straight-line, 20 years, no residual value. c. Accrued interest expense on the note payable for the store fodtures. d. Accrued interest expense on the mortgage payable. e. Accrued income tax expense of $31,000 5. Post adjusting entries and prepare an adjusted trial balance. 6. Prepare a multi-step income statement and statement of retained earnings for the quarter ended December 31, 2018. Prepare a classified balance sheet as of December 31, 2018. Assume that $15.970 of the mortgage payable is due within the next year. 7. Evaluate the company's success for the first quarter of operations by calculating the following ratios. The market price of the common stock is $30 on December 31, 2018. Round to two decimal places a Times interest earned b. Debt to equity c. Earnings per share d. Price learnings ratio Rate of return on common stock 8. The Kinston Company wants to expand and is considering options for raising additional cash The company estimates net income before the expansion of $280,000 in 2010 and that the expansion will provide additional operating income of $80.000 in 2019. The company intends 10 sell the shares of treasury stock, so use issued shares for the analysis rather than current shares outstanding. Compare these options, assuming a 30% income tax rate Plan 1: Issue 20.000 additional shares of common stock for $30 per share Pian 2: Issue 5140,000 in 15-year 14% bonds payable Which option will contribute more net income in 2019? Which option provides the highest EPS? Print Done Clear All mapters 11, 12, 13 p. 726 1 of 1 (0 complete) Data Table - 7 The Tusquittee Company Chart of Accounts Cash Dividends Payable-Common Merchandise Inventory Notes Payable Land Mortgages Payable Building Common Stock-31 Par Value Store Fixtures Paid-in Capital in Excess of Par-Common Accumulated Depreciation Paid-in Capital from Treasury Stock Transactions Accounts Payable Retained Earnings Employee Income Taxes Payable Treasury Stock-Common FICA_OASDI Taxes Payable Cash Dividends FICA--Medicare Taxes Payable Sales Revenue Employee Health Insurance Payable Cost of Goods Sold Federal Unemployment Taxes Payable Salanes Expense State Unemployment Takes Payable Payroll Tax Expense Income Tax Payable Utilities Expense Sales Tax Payable Depreciation Expanse Estimated Warranty Payable Warranty Expense Interest Payable Income Tax Expense Interest Expense Print Done Clear All 1 of 1 (0 complete) More Info Oct 1 Issued 32,000 shares of $1 par value common stock for cash of $15 per share Issued a $300,000. 10 year, 10% mortgage payable for land with an existing store building. Mortgage payments of $3,750 are due on the first day of each month, beginning November 1. The assets had the following market values: Land. $40,000, Building. Oct 1 $200.000 Issued a one-year, 8% note payable for $12,000 for store fixtures. The principal and Oct 1 interest are due October 1, 2019 Oct 3 Purchased merchandise inventory on account from First Rate for $132,000, terms n/30. Oct. 15 Paid $120 for utilities. Recorded cash sales for the month of $170,000 plus sales tax of 6%. The cost of the Oct 31 goods sold was $102.000 and estimated warranty payable was 8%. Oct 31 Recorded October payroll and paid employees Oct. 31 Accrued employer payroll taxes for October. Nov. 1 Paid the first mortgage payment. Nov. 3 Paid First Rate for the merchandise inventory purchased on October 3. Nov. 10 Purchased merchandise inventory on account from First Rate for $100.000, terms n/30 Nov. 12 Purchased 1.000 shares of treasury stock for $14 per share Nov. 15 Paid all liabilities associated with the October 31 payroll. Nov. 15 Remitted (paid) sales tax from October sales to the state of North Carolina. Nov. 16 Paid $3.500 to satisfy warranty claims. Nov. 17 Declared cash dividends of $1 per outstanding share of common stock Nov. 18 Paid $320 for utilities Nov. 27 Paid the cash dividends Recorded cash sales for the month of $120.000 plus sales tax of 6% The cost of the Nov. 30 goods sold was $72.000 and estimated warranty payable was 0% Print Done WORM apters 11, 12, 13 p. 726 1 of 1 (0 complete) More Info Nov. 10 Purchased merchandise invertory on account from First Rate for $100.000, terms 130. Nov. 12 Purchased 1,000 shares of treasury stock for $14 per share. Nov. 15 Paid all liabilities associated with the October 31 payroll Nov. 15 Remitted (paid) sales tax from October sales to the state of North Carolina. Nov. 16 Paid $3.500 to satisfy warranty claims, Nov. 17 Declared cash dividends of S1 per outstanding share of common stock. Nov. 18 Paid $320 for utilities. Nov. 27 Paid the cash dividends. Recorded cash sales for the month of $120,000 plus sales tax of 6% The cost of the Nov. 30 goods sold was $72.000 and estimated warranty payable was 8%. Nov. 30 Recorded November payroll and paid employees Nov. 30 Accrued employer payroll taxes for November Dec. 1 Paid the second mortgage payment Dec. 10 Paid First Rate for the merchandise inventory purchased on November 10. Dec. 12 Paid $7.300 to satisfy warranty claims. Dec. 15 Sold 250 shares of treasury stock for $20 per share Dec. 15 Paid all liabilities associated with the November 30 payroll Dec. 15 Remitted (paid) sales tax from November sales to the state of North Carolina Dec. 18 Paid $200 for utilities Dec. 19 Purchased merchandise inventory on account from First Rate for $75.000, terms 1/30 Recorded cash sales for the month of $180.000 plus sales tax of 6%. The cost of the Dec 31 goods sold was 596,000 and estimated warranty payable was 6% Deo. 31 Recorded December payroll and paid employees Dec. 31 Accrued employer payroll taxes for December Print Done LEH