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Lily Company's balance sheet at December 31, 2021, is presented below. LILY COMPANY Balance Sheet December 31, 2021 Cash $33,000 Accounts Payable $15,125 Inventory 33,825 Interest Payable 275 Prepaid Insurance 6,600 Notes Payable 55,000 Equipment 41,800 Owner's Capital 44,825 $115,225 $115,225 During January 2022, the following transactions occurred. (Lily Company uses the perpetual inventory system.) 1. 2. Lily paid $275 interest on the note payable on January 1, 2022. The note is due December 31, 2023. Lily purchased $287,210 of inventory on account. 3. Lily sold for $484,000 cash, inventory which cost $291,500. Lily also collected $31,460 in sales taxes. 4. Lily paid $253,000 in accounts payable. 5. Lily paid $18,700 in sales taxes to the state. 6. Paid other operating expenses of $33,000. 7. On January 31, 2022, the payroll for the month consists of salaries and wages of $78,000. All salaries and wages are subject to 7.65% FICA taxes. A total of $9,820 federal income taxes are withheld. The salaries and wages are paid on February 1. Adjustment data: 8. Interest expense of $275 has been incurred in January on the notes payable. 9. The insurance for the year 2022 was prepaid on December 31, 2021. 10. 11. The equipment was acquired on December 31, 2021, and will be depreciated on a straight-line basis over 5 years with a $2,200 salvage value. Employer's payroll taxes include 7.65% FICA taxes, a 5.4% state unemployment tax, and an 0.6% federal unemployment tax. (a) Your answer is partially correct. Prepare journal entries for the transactions listed above and the adjusting entries. (Credit account titles are automatically indented when amount is entered. Do not indent manually. Round answers to 0 decimal places, e.g. 5,275.) Account Titles and Explanation Interest Payable Cash

Lily Company's balance sheet at December 31, 2021, is presented below. LILY COMPANY Balance Sheet December 31, 2021 Cash $33,000 Accounts Payable $15,125 Inventory 33,825 Interest Payable 275 Prepaid Insurance 6,600 Notes Payable 55,000 Equipment 41,800 Owner's Capital 44,825 $115,225 $115,225 During January 2022, the following transactions occurred. (Lily Company uses the perpetual inventory system.) 1. 2. Lily paid $275 interest on the note payable on January 1, 2022. The note is due December 31, 2023. Lily purchased $287,210 of inventory on account. 3. Lily sold for $484,000 cash, inventory which cost $291,500. Lily also collected $31,460 in sales taxes. 4. Lily paid $253,000 in accounts payable. 5. Lily paid $18,700 in sales taxes to the state. 6. Paid other operating expenses of $33,000. 7. On January 31, 2022, the payroll for the month consists of salaries and wages of $78,000. All salaries and wages are subject to 7.65% FICA taxes. A total of $9,820 federal income taxes are withheld. The salaries and wages are paid on February 1. Adjustment data: 8. Interest expense of $275 has been incurred in January on the notes payable. 9. The insurance for the year 2022 was prepaid on December 31, 2021. 10. 11. The equipment was acquired on December 31, 2021, and will be depreciated on a straight-line basis over 5 years with a $2,200 salvage value. Employer's payroll taxes include 7.65% FICA taxes, a 5.4% state unemployment tax, and an 0.6% federal unemployment tax. (a) Your answer is partially correct. Prepare journal entries for the transactions listed above and the adjusting entries. (Credit account titles are automatically indented when amount is entered. Do not indent manually. Round answers to 0 decimal places, e.g. 5,275.) Account Titles and Explanation Interest Payable Cash

FINANCIAL ACCOUNTING
FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Lily Company's balance sheet at December 31, 2021, is presented below. LILY COMPANY Balance Sheet December 31, 2021 Cash $33,000 Accounts Payable $15,125 Inventory 33,825 Interest Payable 275 Prepaid Insurance 6,600 Notes Payable 55,000 Equipment 41,800 Owner's Capital 44,825 $115,225 $115,225 During January 2022, the following transactions occurred. (Lily Company uses the perpetual inventory system.) 1. 2. Lily paid $275 interest on the note payable on January 1, 2022. The note is due December 31, 2023. Lily purchased $287,210 of inventory on account. 3. Lily sold for $484,000 cash, inventory which cost $291,500. Lily also collected $31,460 in sales taxes. 4. Lily paid $253,000 in accounts payable. 5. Lily paid $18,700 in sales taxes to the state. 6. Paid other operating expenses of $33,000. 7. On January 31, 2022, the payroll for the month consists of salaries and wages of $78,000. All salaries and wages are subject to 7.65% FICA taxes. A total of $9,820 federal income taxes are withheld. The salaries and wages are paid on February 1. Adjustment data: 8. Interest expense of $275 has been incurred in January on the notes payable. 9. The insurance for the year 2022 was prepaid on December 31, 2021. 10. 11. The equipment was acquired on December 31, 2021, and will be depreciated on a straight-line basis over 5 years with a $2,200 salvage value. Employer's payroll taxes include 7.65% FICA taxes, a 5.4% state unemployment tax, and an 0.6% federal unemployment tax. (a) Your answer is partially correct. Prepare journal entries for the transactions listed above and the adjusting entries. (Credit account titles are automatically indented when amount is entered. Do not indent manually. Round answers to 0 decimal places, e.g. 5,275.) Account Titles and Explanation Interest Payable Cash
Transcribed Image Text:Lily Company's balance sheet at December 31, 2021, is presented below. LILY COMPANY Balance Sheet December 31, 2021 Cash $33,000 Accounts Payable $15,125 Inventory 33,825 Interest Payable 275 Prepaid Insurance 6,600 Notes Payable 55,000 Equipment 41,800 Owner's Capital 44,825 $115,225 $115,225 During January 2022, the following transactions occurred. (Lily Company uses the perpetual inventory system.) 1. 2. Lily paid $275 interest on the note payable on January 1, 2022. The note is due December 31, 2023. Lily purchased $287,210 of inventory on account. 3. Lily sold for $484,000 cash, inventory which cost $291,500. Lily also collected $31,460 in sales taxes. 4. Lily paid $253,000 in accounts payable. 5. Lily paid $18,700 in sales taxes to the state. 6. Paid other operating expenses of $33,000. 7. On January 31, 2022, the payroll for the month consists of salaries and wages of $78,000. All salaries and wages are subject to 7.65% FICA taxes. A total of $9,820 federal income taxes are withheld. The salaries and wages are paid on February 1. Adjustment data: 8. Interest expense of $275 has been incurred in January on the notes payable. 9. The insurance for the year 2022 was prepaid on December 31, 2021. 10. 11. The equipment was acquired on December 31, 2021, and will be depreciated on a straight-line basis over 5 years with a $2,200 salvage value. Employer's payroll taxes include 7.65% FICA taxes, a 5.4% state unemployment tax, and an 0.6% federal unemployment tax. (a) Your answer is partially correct. Prepare journal entries for the transactions listed above and the adjusting entries. (Credit account titles are automatically indented when amount is entered. Do not indent manually. Round answers to 0 decimal places, e.g. 5,275.) Account Titles and Explanation Interest Payable Cash
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