Northify Company is a retail company that began operations on October 1,2024 , when it incorporated in the state of North Carolina. The Northify Company is authorized to issue 100,000 shares of $1 par value common stock and 50,000 shares of 5%,$50 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. Following is the chart of accounts for The Northify Company. As a new business, all beginning balances are $0. The Northify Company completed the following transactions during the last quarter of 2024, its first year of operations: Oct. 1 Issued 25,000 shares of \$1 par value common stock for cash of \$10 per share. 1 Issued a $200,000,10-year, 8% mortgage payable for land with an existing store building. Mortgage payments of $2,425 are due on the first day of each month, beginning November 1 . The assets had the following market values: Land, $40,000; Bulding, $160,000. 1 Issued a one-year, 10% note payable for $10,000 for store fixtures. The principal and interest are due October 1, 2025. 30 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 8%. 30 Recorded November payroll and paid employees. 30 Accrued employer payroll taxes for November. Dec. 1 Paid the second mortgage payment. 10 Paid Top Rate for the merchandise inventory purchased on November 10. 12 Paid $7,500 to satisfy warranty claims. 15 Sold 300 shares of treasury stock for $20 per share. 15 Paid all liabilities associated with the November 30 payroll. 15 Remitted (paid) sales tax from November sales to the state of North Carolina. 18 Paid $220 for utilities. 19 Purchased merchandise inventory on account from Top Rate for $90,000, terms n/30. 31 Recorded cash sales for the month of $210,000 plus sales tax of 6%. The cost of the goods sold was $126,000 and estimated warranty payable was 8%. 31 Recorded December payroll and paid employees. 31 Accrued employer payroll taxes for December. Requirements 1 In preparation for recording the transactions, prepare: a. 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 $132,900 earned; Medicare: 1.45% up to $200,000,2.35% on earnings above 5200,000 . All emoloveet naw cann tawawa. 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, Post to the general ledger. 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. Store Fixtures, straight-line, 20 years, no residual value. c. Accrued interest expense on the note payable for thestore fixtures. d. Accrued interest expense on the mortgage payable. e. Accrued income tax expense of $36,000. 5 Post adjusting entries and prepare an adjusted trial balance. 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 $13,840 of the mortgage payable is due within the next year. Evaluate the company's success for the first quarter of operations by calculating the following ratios. The market price of the common stock is $2.5 on December 31,2024 . Round to two decimal places. a. Timesinterest earned b. Debt to equity c. Earnings per share d. Price/earnings ratio e. Rate of return on common stock 8 The Northify Company wants to expand and is considering options for raising additional cash. The company estimates net income before the expansion of $250,000 in 2025 and that the expansion will provide additional operating income of $75,000 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 30 income tax rate: Plan 1: Issue 10,000 additional shares of common stock for $20 per share Plan 2: issue $200,000 in 20 year, 128 bonds payable. Which option will contribute more net income in 2025? Which option provides the highest EPS? REQ1 In preparation for recording the transactions, prepare: a An amortization schedule for the first 3 mo b 8