Requirement 1b. In preparation for recording the transactions, prepare: 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 $ 118 comma 500 earned; Medicare: 1.45% up to $ 200 comma 000, 2.35% on earnings above $ 200 comma 000. Begin by preparing the payroll register for October. (Round all amounts to the nearest cent. Complete all answer boxes. Enter a "0" for any zero balances. Abbreviations used: Beg. = Beginning; Cum. = Cumulative; Earn. = Earnings; Med. = Medicare; Ins. = Insurance; With. = Withholdings.) Earnings Withholdings Beg. Current Ending Cum. Period Cum. Income Health Total Net Employee Earn. Earnings Earn. OASDI Med. Tax Ins. With. Pay Jones 54000 6000 11400 372 8700 1800 300 11172 Smith 45000 5000 50000 310 7200 1000 300 8810 Martin 27000 3000 30000 186 4350 540 300 5376 0

In preparation for recording the transactions, prepare:

a.

An amortization schedule for the first 3 months of the mortgage payable issued on

OctoberOctober

1. Round interest calculations to the nearest dollar.

b.

Payroll registers for

OctoberOctober,

NovemberNovember,

and

DecemberDecember.

All employees worked

OctoberOctober

1 through

DecemberDecember

31 and are subject to the following FICA taxes: OASDI:

6.26.2%

on first

$ 118 comma 500$118,500

earned; Medicare:

1.451.45%

up to

$ 200 comma 000$200,000,

2.352.35%

on earnings above

$ 200 comma 000$200,000.

Additional payroll information includes:

	Monthly	Federal	Health
Employee	Salary	Income Tax	Insurance
Kate Jones	$6,000	$1,800	$300
Mary Smith	5,000	1,000	300
Sherry Martin	3,000	450	300

c.

Calculations for employer payroll taxes liabilities for

OctoberOctober,

NovemberNovember,

and

DecemberDecember:

OASDI:

6.26.2%

on first

$ 118 comma 500$118,500

earned; Medicare:

1.451.45%;

SUTA:

5.45.4%

on first

$ 7 comma 000$7,000

earned; FUTA:

0.60.6%

on first

$ 7 comma 000$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

DecemberDecember

31,

20182018:

a.

Depreciation on the Building, straight-line,

4040

years, no residual value.

b.

Depreciation on Store Fixtures, straight-line,

2020

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

$ 36 comma 000$36,000.

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

DecemberDecember

31,

20182018.

Prepare a classified balance sheet as of

DecemberDecember

31,

20182018.

Assume that

$ 13 comma 840$13,840

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

$ 25$25

on

DecemberDecember

31,

20182018.

Round to two decimal places.

a.

Times interest earned

b.

Debt to equity

c.

Earnings per share

d.

Price/earnings ratio

e.

Rate of return on common stock

8.

The

TusquitteeTusquittee

Company wants to expand and is considering options for raising additional cash. The company estimates net income before the expansion of

$ 250 comma 000$250,000

in

20192019

and that the expansion will provide additional operating income of

$ 75 comma 000$75,000

in

20192019.

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

3030%

income tax rate:

Plan 1: Issue

10 comma 00010,000

additional shares of common stock for

$ 20$20

per sharePlan 2: Issue

$ 200 comma 000$200,000

in

2020-year,

1212%

bonds payable.

Which option will contribute more net income in

20192019?

Which option provides the hig