Morgan 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 $55,000
Equipment $39,300	Owner's Capital $38,976

Total: $107,504 Total: $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.)