CP 11 Morgan Company balance sheet at December 31, 2016, is presented below.l Cash 30,000, Inventory 30,750, Prepaid insurance 6,000, equipment 38,000, accounts payable 13,750, Interest payable 250, Notes Payable 50,000, Owner's Capital 40,750. 1. During January 2017 the notes is due December 31,2018. 2. Morgan purchased $261,000, of inventory on account. 3. morgan sold for $440,000 cash inventory which cost $265,000.. Morgan also collected $28,600 in sales taxes. Morgan paid $230,00 in Accounts payable 5. Morgan paid 17,000 in sales taxes to state. 6. paid other operating expenses $30,000 7. On January 31, 2017 the payroll for the month ocnissts of salrMorgan Companys balance sheet at December 31, 2016, is presented below. MORGAN COMPANY Balance Sheet December 31, 2016 Cash $31,500 Accounts Payable $12,750 Inventory 30,500 Interest Payable 278 Prepaid Insurance 6,204 Notes Payable 55,500 Equipment 39,300 Owners Capital 38,976 $107,504 $107,504 During January 2017, the following transactions occurred. (Morgan Company uses the perpetual inventory system.) 1. Morgan paid $278 interest on the note payable on January 1, 2017. The note is due December 31, 2018. 2. Morgan purchased $242,000 of inventory on account. 3. Morgan sold for $482,000 cash, inventory which cost $266,000. Morgan also collected $31,330 in sales taxes. 4. Morgan paid $226,000 in accounts payable. 5. Morgan paid $15,500 in sales taxes to the state. 6. Paid other operating expenses of $21,000. 7. On January 31, 2017, 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 $8,500 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 2017 was prepaid on December 31, 2016. 10. The equipment was acquired on December 31, 2016, and will be depreciated on a straight-line basis over 5 years with a $3,000 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. (Credit account titles are automatically indented when amount is entered. Do not indent manually. Round answers to 0 decimal places, e.g. 5,275.)ies 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 withhold. The salaries and wages are paid on February 1. Adjustment data: 8. Interest expense of $250 has been incurred on the notes payable. 9. The insurance for the year 2017 was prepaid on December 31, 2016. 10. The equipment was acquired on December 31, 2016 and will be depreciated on a straight-line basis over 5 years with a $2,000 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. (a) prepare journal entries for the transactions listed above and the adjusting entries. (b) Prepare an adjusted trial balance at January 31, 2017. (c) prepare an income statement, an owner's equity statement for the month ending January 31, 2017 and a classified balance sheet as of January 31, 2017