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C$11-2($Static$)$ Recording Daily and Adjusting Entries, and Preparing and Evaluating Financial Statements $($Part A: Chapters $3-4,6-11$; Part B: Ch$.11,$ Suppl. $11$B; Part C: App. C$)[$LO $3-3,4-2,4-3,4-4,6-3,6-4,7-3,8-2,9-2,9-3,9-5,10-2,10-3,11$

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One Product Corporation $($OPC$)$ incorporated at the beginning of last year. The balances on its post$-$closing trial balance prepared on December $31,$ at the end of its first year of operations, were:

Cash $ $19,500$

Accounts Receivable $8,250$

Allowance for Doubtful Accounts $885$

Inventory $12,060$

Prepaid Rent $1,600$

Equipment $25,000$

Accumulated Depreciation $2,400$

Accounts Payable $0$

Sales Tax Payable $500$

FICA Payable $600$

Withheld Income Taxes Payable $500$

Salaries and Wages Payable $1,600$

Unemployment Tax Payable $300$

Deferred Revenue $4,500$

Interest Payable $495$

Notes Payable $($long$-$term$)22,000$

Common Stock $13,300$

Additional Paid$-$In Capital, Common $19,210$

Retained Earnings $4,120$

Treasury Stock $4,000$

The following information is relevant to the first month of operations in the following year:

OPC sells its inventory at $$150$ per unit, plus sales tax of $6$ percent. OPC$$s January $1$ inventory balance consists of $180$ units at a total cost of $$12,060.$ OPC$$s policy is to use the FIFO method, recorded using a perpetual inventory system.

The $$1,600$ in Prepaid Rent relates to a payment made in December for January rent this year.

The equipment was purchased on July $1$ of last year. It has a residual value of $$1,000$ and an expected life of five years. It is being depreciated using the straight$-$line method.

Employee wages are $$4,000$ per month. Employees are paid on the $16$th for the first half of the month and on the first day of the following month for the second half of each month. Withholdings each pay period include $$250$ of income taxes and $$150$ of FICA taxes. These withholdings and the employer$$s matching contribution are paid monthly on the second day of the following month. In addition, unemployment taxes of $$50$ are accrued each pay period, and will be paid on March $31.$

Deferred Revenue is for $30$ units ordered and paid for in advance by two customers in late December. One order of $25$ units is to be filled in January, and the other will be filled in February.

Notes Payable arises from a three$-$year, $9$ percent bank loan received on October $1$ last year.

The par value on the common stock is $$2$ per share.

Treasury Stock arises from the reacquisition of $500$ shares at a cost of $$8$ per share.

January Transactions

On $1/01,$ OPC paid employees$$ salaries and wages that were previously accrued on December $31.$

A truck is purchased on $1/02$ for $$10,000$ cash. It is estimated this vehicle will be used for $50,000$ miles, after which it will have no residual value.

Payroll withholdings and employer contributions for December are remitted on $1/03.$

OPC declares a $$0\mathrm{.}50$ cash dividend on each share of common stock on $1/04,$ to be paid on $1/10.$

A $$950$ customer account is written off as uncollectible on $1/05.$

On $1/06,$ recorded sales of $175$ units of inventory on account. Sales tax is charged but not yet collected or remitted to the state.

Sales taxes of $$500$ that had been collected and recorded in December are paid to the state on $1/07.$

On $1/08,$ OPC issued $300$ shares of treasury stock for $$2,400.$

Collections from customers on account, totaling $$8,500,$ are recorded on $1/09.$

On $1/10,$ OPC distributes the $$0\mathrm{.}50$ cash dividend declared on January $4.$ The company$$s stock price is currently $$5$ per share.

OPC purchases on account and receives $70$ units of inventory on $1/11$ for $$4,410.$

The equipment purchased last year for $$25,000$ is sold on $1/15$ for $$23,000$ cash. Record depreciation for the first half of January prior to recording the equipment disposal.

Payroll for January $115$ is recorded and paid on $1/16.$ Be sure to accrue unemployment taxes and the employer$$s matching share of FICA taxes.

Having sold the equipment, OPC pays off the note payable in full on $1/17.$ The amount paid is $$22,585,$ which includes interest accrued in December and an additional $$90$ interest through January $17.$

On $1/27,$ OPC records sales of $30$ units of inventory on account. Sales tax is charged but not yet collected or remitted.

A portion of the advance order from December $(25$ units$)$ is delivered on $1/29.$ No sales tax is collected on this transaction because the customer is a U$.$S$.$ governmental organization that is exempt from sales tax.

To obtain funds for purchasing new equipment, OPC issued bonds on $1/30$ with a total face value of $$90,000,$ stated interest rate of $5$ percent, annual compounding, and six$-$year maturity date. OPC received $$81,420$ from the bond issuance, which implies a market interest rate of $7$ percent.

On $1/31,$ OPC records units$-$of$-$production depreciation on the vehicle $($truck$),$ which was driven $1,900$ miles this month.

OPC estimates that $2\%$ of the