More Info Oct. 1 Issued 32,000 shares of $1 par value common stock for cash of $8 per share. Oct. 1 Issued a $210,000, 10-year, 9% mortgage payable for land with an existing store building. Mortgage payments of $2,625 are due on the first day of each month, beginning November 1. The assets had the following market values: Land, $30,000; Building, $180,000 Oct. 1 Issued a one-year, 9% note payable for $15,200 for store fixtures. The principal and interest are due October 1, 2025. Oct. 3 Purchased merchandise inventory on account from Superior for $138,000, terms n/30. Oct. 15 Paid $170 for utilities. Oct. 31 Recorded cash sales for the month of $140,000 plus sales tax of 6%. The cost of the goods sold was $84,000 and estimated warranty payable was 10%. 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 Superior for the merchandise inventory purchased on October 3. Nov. 10 Purchased merchandise inventory on account from Superior for $130,000, terms n/30. Nov. 12 Purchased 600 shares of treasury stock for $18 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 $5,500 to satisfy warranty claims. Nov. 17 Declared cash dividends of $1 per outstanding share of common stock. Nov. 18 Paid $260 for utilities. Nov. 27 Paid the cash dividends. Nov. 30 Recorded cash sales for the month of $180,000 plus sales tax of 6%. The cost of the goods sold was $108,000 and estimated warranty payable was 10%. 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 Superior for the merchandise inventory purchased on November 10. Dec. 12 Paid $7,700 to satisfy warranty claims. Dec. 15 Sold 100 shares of treasury stock for $23 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 $210 for utilities. Dec. 19 Purchased merchandise inventory on account from Superior for $110,000, terms n/30. Dec. 31 Recorded cash sales for the month of $170,000 plus sales tax of 6%. The cost of the goods sold was $102,000 and estimated warranty payable was 10%. Dec. 31 Recorded December payroll and paid employees. Dec. 31 Accrued employer payroll taxes for December. Print Done Requirements 1. In preparation for recording the transactions, prepare: a. An amortization schedule for the first three 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 $132,900 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 Karen Jackson $ 6,200 $ 1,860 $ 100 Marcy Skinner 4,600 920 100 Shannon Moreno 3,200 480 100 c. Calculations for employer payroll taxes liabilities for October, November, and December: OASDI: 6.2% on first $132,900 earned; Medicare: 1.45%; SUTA: 5.4% on first $7,000 earned; 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, 2024: 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. e. Accrued income tax expense of $38,000. 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, 2024. Prepare a classified balance sheet as of December 31, 2024. Assume that $13,330 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, 2024. Round to two decimal places. a. Times interest earned b. Debt to equity c. Earnings per share d. Pricelearnings ratio e. Rate of return on common stock 8. The Edenton Company wants to expand and is considering options for raising additional cash. The company estimates net income before the expansion of $300,000 in 2025 and that the expansion will provide additional operating income of $70,000 in 2025. The company intends to sell the shares of treasury stock, so use issued shares for the analysis rather than current shares outstanding. Compare these options, assuming a 40% income tax rate: Plan 1: Issue 15,000 additional shares of common stock for $16 per share Plan 2: Issue $250,000 in 15-year, 16% bonds payable. Which option will contribute more net income in 2025? Which option provides the highest EPS? Print Done Done Nov. 15: Remitted (paid) sales tax from October sales to the state of North Carolina. Date Accounts Debit Credit Nov. 15 8,400 Sales Tax Payable Cash 8,400 Credit Nov. 16: Paid $5,500 to satisfy warranty claims. Date Accounts Nov. 16 Estimated Warranty Payable Cash Debit 5,500 5,500 Nov. 17: Declared cash dividends of $1 per outstanding share of common stock. Date Accounts Debit Credit Nov. 17 Cash Dividends Dividends Payable-Common More Info Oct. 1 Issued 32,000 shares of $1 par value common stock for cash of $8 per share. Oct. 1 Issued a $210,000, 10-year, 9% mortgage payable for land with an existing store building. Mortgage payments of $2,625 are due on the first day of each month, beginning November 1. The assets had the following market values: Land, $30,000; Building, $180,000 Oct. 1 Issued a one-year, 9% note payable for $15,200 for store fixtures. The principal and interest are due October 1, 2025. Oct. 3 Purchased merchandise inventory on account from Superior for $138,000, terms n/30. Oct. 15 Paid $170 for utilities. Oct. 31 Recorded cash sales for the month of $140,000 plus sales tax of 6%. The cost of the goods sold was $84,000 and estimated warranty payable was 10%. 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 Superior for the merchandise inventory purchased on October 3. Nov. 10 Purchased merchandise inventory on account from Superior for $130,000, terms n/30. Nov. 12 Purchased 600 shares of treasury stock for $18 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 $5,500 to satisfy warranty claims. Nov. 17 Declared cash dividends of $1 per outstanding share of common stock. Nov. 18 Paid $260 for utilities. Nov. 27 Paid the cash dividends. Nov. 30 Recorded cash sales for the month of $180,000 plus sales tax of 6%. The cost of the goods sold was $108,000 and estimated warranty payable was 10%. 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 Superior for the merchandise inventory purchased on November 10. Dec. 12 Paid $7,700 to satisfy warranty claims. Dec. 15 Sold 100 shares of treasury stock for $23 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 $210 for utilities. Dec. 19 Purchased merchandise inventory on account from Superior for $110,000, terms n/30. Dec. 31 Recorded cash sales for the month of $170,000 plus sales tax of 6%. The cost of the goods sold was $102,000 and estimated warranty payable was 10%. Dec. 31 Recorded December payroll and paid employees. Dec. 31 Accrued employer payroll taxes for December. Print Done Requirements 1. In preparation for recording the transactions, prepare: a. An amortization schedule for the first three 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 $132,900 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 Karen Jackson $ 6,200 $ 1,860 $ 100 Marcy Skinner 4,600 920 100 Shannon Moreno 3,200 480 100 c. Calculations for employer payroll taxes liabilities for October, November, and December: OASDI: 6.2% on first $132,900 earned; Medicare: 1.45%; SUTA: 5.4% on first $7,000 earned; 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, 2024: 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. e. Accrued income tax expense of $38,000. 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, 2024. Prepare a classified balance sheet as of December 31, 2024. Assume that $13,330 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, 2024. Round to two decimal places. a. Times interest earned b. Debt to equity c. Earnings per share d. Pricelearnings ratio e. Rate of return on common stock 8. The Edenton Company wants to expand and is considering options for raising additional cash. The company estimates net income before the expansion of $300,000 in 2025 and that the expansion will provide additional operating income of $70,000 in 2025. The company intends to sell the shares of treasury stock, so use issued shares for the analysis rather than current shares outstanding. Compare these options, assuming a 40% income tax rate: Plan 1: Issue 15,000 additional shares of common stock for $16 per share Plan 2: Issue $250,000 in 15-year, 16% bonds payable. Which option will contribute more net income in 2025? Which option provides the highest EPS? Print Done Done Nov. 15: Remitted (paid) sales tax from October sales to the state of North Carolina. Date Accounts Debit Credit Nov. 15 8,400 Sales Tax Payable Cash 8,400 Credit Nov. 16: Paid $5,500 to satisfy warranty claims. Date Accounts Nov. 16 Estimated Warranty Payable Cash Debit 5,500 5,500 Nov. 17: Declared cash dividends of $1 per outstanding share of common stock. Date Accounts Debit Credit Nov. 17 Cash Dividends Dividends Payable-Common