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The Kinston Company is a retail company that began operations on October 1, 2024, when it incorporated in the state of North Carolina. The Kinston Company is authorized to issue 300,000 shares of $1 par value common stock and 65,000 shares of 7%, 560 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 5% 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 Kinston Company. As a new business, all beginning balances are SO. E: (Click the icon to view the chart of accounts.) The Kinston Company completed the following transactions during the last quarter of 2024, its first year of operations: (Click the icon to view the transactions.) Read the requirements Requirement 1a. In preparation for recording the transactions, prepare: An amortization schedule for the first three months of the mortgage payable issued on October 1. Round interest calculations to the nearest dollar.
Requirement 1a. In preparation for recording the transactions, prepare: An amortization schedule for the first three months of the mortgage payable issued on October 1. Round interest calculations to the nearest dollar. Beginning Principal Interest Total Ending Balance Payment Expense Payment Balance 10/01/2024 250,000 11/1/2024 $ 250,000 $ 2,083 $ 1,042 $ 3,125 $ 247,917 12/1/2024 247,917' 2,092 1,033 3,125 245,825 01/01/2025 245,825 2,101' 1,024 3,125 243,724 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 $132,900 earned: Medicare: 1.45% up to $200,000, 2.35% on earnings above $200,000 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 Jackson Shrader McDaniel
Oct. 1 Issued 20,000 shares of $1 par value common stock for cash of $24 per share. Oct. 1 Issued a $320,000, 10-year, 6% mortgage payable for land with an existing store building. Mortgage payments of $4,000 are due on the first day of each month. beginning November 1. The assets had the following market values: Land, S80,000; Building, $240,000 Oct. 1 Issued a one-year, 7% note payable for $14,000 for store fixtures. The principal and interest are due October 1, 2025. Oct. 3 Purchased merchandise inventory on account from Superior for $120,000, terms n/30. Oct. 15 Paid $200 for utilities. Oct. 31 Recorded cash sales for the month of $200,000 plus sales tax of 7%. The cost of the goods sold was $120,000 and estimated warranty payable was 6%. Oct. 31 Recorded October payroll and paid employees. Oct. 31 Accrued employer payroll taxes for October Nov. 1 Paid the first mortgage payment Nov. 3 Paid Superior for the merchandise inventory purchased on October 3. Nov. 10 Purchased merchandise inventory on account from Superior for $170,000, terms n/30 Nov. 12 Purchased 700 shares of treasury stock for 512 per share. Nov. 15 Paid all liabilities associated with the October 31 payroll. Nov. 15 Remitted (paid) sales tax from October sales to the state of North Carolina. Nov. 16 Paid $7,000 to satisfy warranty claims. Nov. 17 Declared cash dividends of $1 per outstanding share of common stock. Nov. 18 Paid $360 for utilities. Nov. 27 Paid the cash dividends. Nov. 30 Recorded cash sales for the month of $180,000 plus sales tax of 7%. The cost of the goods sold was $108,000 and estimated warranty payable was 6%. Nov. 30 Recorded November payroll and paid employees. Nov. 30 Accrued employer payroll taxes for November Dec. 1 Paid the second mortgage payment.
Nov. 1 Paid the first mortgage payment. Nov. 3 Paid Superior for the merchandise inventory purchased on October 3. Nov. 10 Purchased merchandise inventory on account from Superior for $170,000, terms n/30. Nov. 12 Purchased 700 shares of treasury stock for S12 per share. Nov. 15 Paid all liabilities associated with the October 31 payroll. Nov. 15 Remitted (paid) sales tax from October sales to the state of North Carolina. Nov. 16 Paid $7,000 to satisfy warranty claims. Nov. 17 Declared cash dividends of $1 per outstanding share of common stock. Nov. 18 Paid $360 for utilities. Nov. 27 Paid the cash dividends. Nov. 30 Recorded cash sales for the month of $180,000 plus sales tax of 7%. The cost of the goods sold was $108,000 and estimated warranty payable was 6%. Nov. 30 Recorded November payroll and paid employees. Nov. 30 Accrued employer payroll taxes for November. Dec. 1 Paid the second mortgage payment Dec. 10 Paid Superior for the merchandise inventory purchased on November 10. Dec. 12 Paid $7,200 to satisfy warranty claims Dec. 15 Sold 400 shares of treasury stock for $16 per share. Dec. 15 Paid all liabilities associated with the November 30 payroll. Dec. 15 Remitted (paid) sales tax from November sales to the state of North Carolina. Dec. 18 Paid $260 for utilities. Dec. 19 Purchased merchandise inventory on account from Superior for $115,000, terms n/30. Dec. 31 Recorded cash sales for the month of $170,000 plus sales tax of 7%. The cost of the goods sold was $102,000 and estimated warranty payable was 6%. Dec. 31 Recorded December payroll and paid employees. Dec. 31 Accrued employer payroll taxes for December
The Tusquittee Company Chart of Accounts Cash Dividends Payable-Common Merchandise Inventory Notes Payable Land Mortgages Payable Building Common Stock-$1 Par Value Store Fixtures Paid-in Capital in Excess of Par–Common Accumulated Depreciation Paid-in Capital from Treasury Stock Transactions Accounts Payable Retained Earnings Employee Income Taxes Payable Treasury Stock-Common FICA-OASDI Taxes Payable Cash Dividends FICA—Medicare Taxes Payable Sales Revenue Employee Health Insurance Payable Cost of Goods Sold Federal Unemployment Taxes Payable Salaries Expense State Unemployment Taxes Payable Payroll Tax Expense Income Tax Payable Utilities Expense Sales Tax Payable Depreciation Expense Estimated Warranty Payable Warranty Expense Interest Payable Income Tax Expense Interest Expense
1. In preparation for recording the transactions, prepare: a. An amortization schedule for the first three 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 $200,000. Additional payroll information includes: Monthly Federal Health Employee Salary Income Tax Insurance Kelly Jordan $ 5,500 $ 1,650 $ 350 Marissa Shepard 4,800 960 350 Sara Morgan 2,800 420 350 c. Calculations for employer payroll taxes liabilities for October, November, and December: OASDI: 6.2% 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. 3. Post to the general ledger. 4. 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. Depreciation on Store Fixtures, straight-line, 20 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 $38,000. 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 December 31, 2024. Prepare a classified balance sheet as of December 31, 2024. Assume that $29,902 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 $15 on December 31, 2024. Round to two decimal places. a. Times interest earned b. Debt to equity c. Earnings per share d. Pricelearnings ratio e. Rate of return on common stock 8. The Caldwell Company wants to expand and is considering options for raising additional cash. -Ennnn 20-