I need help in how to prepare journal entries for the transactions listed below and the adjusting entries.

Morgan Company's balance sheet at December 31, 2019, is presented below.

MORGAN COMPANY

Balance Sheet

December 31, 2019

Cash$31,000

Inventory 30,250

Interest Payable 255

Equipment 39,480

$106,922

Accounts Payable$12,750

Prepaid Insurance 6,192

Notes Payable 51,000

Owner's Capital 42,917

$106,922

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

1.Morgan paid $255 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 $483,000 cash, inventory which cost $268,000. Morgan also collected $31,395 in sales taxes.

4.Morgan paid $228,000 in accounts payable.

5.Morgan paid $17,500 in sales taxes to the state.

6.Paid other operating expenses of $22,000.

7.On January 31, 2020, the payroll for the month consists of salaries and wages of $62,000. 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 $255 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 $3,180 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 a income statement.

SWIFTYCOMPANY

Income Statement