[The following information applies to the questions displayed below.] 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 Accounts Receivable Allowance for Doubtful Accounts 20,730 8,260 985 12,420 Inventory Prepaid Rent 1,800 Equipment 37,000 Accumulated Depreciation 3,600 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 518 Notes Payable (long-term) 23,000 Common Stock 16,100 Additional Paid-In Capital, Common Retained Earnings 19,687. 12,320 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 $12,420. OPC's policy is to use the FIFO method, recorded using a perpetual inventory system. The $1,800 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 16th 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 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 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 a. On 1/01, OPC paid employees' salaries and wages that were previously accrued on December 31. b. A truck is purchased on 1/02 for $12,500 cash. It is estimated this vehicle will be used for 50,000 miles, after which it will have no residual value. c. Payroll withholdings and employer contributions for December are remitted on 1/03. d. OPC declares a $0.50 cash dividend on each share of common stock on 1/04, to be paid on 1/10. e. A $1,000 customer account is written off as uncollectible on 1/05. f. 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. g. Sales taxes of $500 that had been collected and recorded in December are paid to the state on 1/07. h. On 1/08, OPC issued 300 shares of treasury stock for $2,400. 1. Collections from customers on account, totaling $17,671, are recorded on 1/09. J. On 1/10, OPC distributes the $0.50 cash dividend declared on January 4. The company's stock price is currently $5 per share. k. OPC purchases on account and receives 70 units of inventory on 1/11 for $3,920. 1. The equipment purchased last year for $37,000 is sold on 1/15 for $37,000 cash. Record depreciation for the first half of January prior to recording the equipment disposal. m. Payroll for January 1-15 is recorded and paid on 1/16. Be sure to accrue unemployment taxes and the employer's matching share of FICA taxes. n. Having sold the equipment, OPC pays off the note payable in full on 1/17. The amount paid is $23,613, which includes: interest accrued in December and an additional $95 interest through January 17. o. On 1/27, OPC records sales of 30 units of inventory on account. Sales tax is charged but not yet collected or remitted. p. 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. q. To obtain funds for purchasing new equipment, OPC issued bonds on 1/30 with a total face value of $100,000, stated interest rate of 5 percent, annual compounding, and six-year maturity date. OPC received $90,467 from the bond issuance, which implies a market interest rate of 7 percent. r. On 1/31, OPC records units-of-production depreciation on the vehicle (truck), which was driven 2,000 miles this month. s. OPC estimates that 2% of the ending accounts receivable balance will be uncollectible. Adjust the applicable accounts on 1/31, using the allowance method. t. On 1/31, adjust for January rent expired. u. Accrue January 31 payroll on 1/31, which will be payable on February 1. Be sure to accrue unemployment taxes and the employer's matching share of FICA taxes. v. Accrue OPC's corporate income taxes on 1/31, estimated to be $5,100. Requirement Statement of General Journal General Ledger Trial Balance Income Statement Stockholders Balance Sheet Equity Analysis Prepare all January journal entries and adjusting entries for items (a)-(v). Review the 'General Ledger' and the adjusted Trial Balance" Tabs to see the effect of the transactions on the account balances. (If no entry is required for a transaction/event, select "No journal entry required" in the first account field.) View transaction list View journal entry worksheet No. Date General Journal 1 January 01 Salaries and Wages Payable Cash Debit Credit Statement of Requirement General Journal General Ledger Trial Balance Income Statement Stockholders Balance Sheet Equity Analysis Each journal entry is posted automatically to the general ledger. Use the drop-down button to view the unadjusted, adjusted, or post-closing balances. Adjusted General Ledger Account Cash Accounts Receivable No. Date Debit Credit Balance No. December 31 20,730 Date December 31 Debit Credit Balance 8,260 Allowance for Doubtful Accounts No. Date Debit December 31 Inventory Credit Balance No. Date Debit Credit Balance 985 December 31 12,420 Prepaid Rent Equipment No. Date Debit Credit Balance No. December 31 1,800 Date December 31 Debit Credit Balance 37,000 Adjusted ONE PRODUCT CORPORATION Income Statement For the Month Ended January 31 Loss(Gain) on Disposal Income from Operations Income before Income Tax Expense $ 669 $ 0 0 $ 0 0 0 0 0 0 $ EA 0 0 0 0 $ 69 0 Adjusted ONE PRODUCT CORPORATION Statement of Stockholders' Equity For the Month Ended January 31 Common Stock Additional Paid- In Capital, Beginning Stock Issuances Net Income Dividends Ending Retained Common Earinings Treasury Stock $ 12,320 0 (3,775) $ 8,545 Adjusted ONE PRODUCT CORPORATION Balance Sheet At January 31 69 $ 0 0 0 0 0 0 0 $ 0 0 0 What was OPC's total payroll cost for January? Total Payroll Cost Will the carrying value of the bond increase or decrease after recording interest in February? What is the interest payment OPC will need to pay annually on the bond? Interest Payment What was the gain or loss was recognized on the issuance of Treasury Stock on January 8?