Hydra Company’s balance sheet at December 31, 2021, is presented below Cash $ 25,400 Accounts Payable $ 13,100 Inventory 28,060 Interest Payable 210 Prepaid Insurance 6280 Notes Payable 43,000 Equipment 32,440 Owner’s Capital 35,870 $ 92,180 $ 92,180 During January 2022, the following transactions occurred. ( Hydra Company uses the perpetual inventory system.) 1. Hydra paid $ 210 interest on the note payable on January 1, 2022. The note is due December 31, 2023. 2. Hydra purchased $ 230,768 of inventory on account. 3. Hydra sold for $ 389,200 cash, inventory which cost $ 231,200. Hydra also collected $ 25,170 in sales taxes. 4. Hydra paid $ 200,400 in accounts payable. 5. Hydra paid $ 14,950 in sales taxes to the state. 6. Paid other operating expenses of $ 28,400. 7. On January 31, 2022, the payroll for the month consists of salaries and wages of $ 65,000. All salaries and wages are subject to 7.65% FICA taxes. A total of $ 8,840 federal income taxes are withheld. The salaries and wages are paid on February 1. Adjustment data: 8. Interest expense of $ 210 has been incurred in January on the notes payable. 9. The insurance for the year 2022 was prepaid on December 31, 2021. 10. The equipment was acquired on December 31, 2021, and will be depreciated on a straight-line basis over 5 years with a $ 2,760 salvage value. 11. Employer’s payroll taxes include 7.65% FICA taxes, a 5.4% state unemployment tax, and an 0.6% federal unemployment tax. Prepare journal entries for the transactions listed above and the adjusting entries.

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

Related questions

Question

Hydra Company’s balance sheet at December 31, 2021, is presented below

During January 2022, the following transactions occurred. ( Hydra Company uses the perpetual inventory system.)

1.		Hydra paid $ 210 interest on the note payable on January 1, 2022. The note is due December 31, 2023.
2.		Hydra purchased $ 230,768 of inventory on account.
3.		Hydra sold for $ 389,200 cash, inventory which cost $ 231,200. Hydra also collected $ 25,170 in sales taxes.
4.		Hydra paid $ 200,400 in accounts payable.
5.		Hydra paid $ 14,950 in sales taxes to the state.
6.		Paid other operating expenses of $ 28,400.
7.		On January 31, 2022, the payroll for the month consists of salaries and wages of $ 65,000. All salaries and wages are subject to 7.65% FICA taxes. A total of $ 8,840 federal income taxes are withheld. The salaries and wages are paid on February 1.

Adjustment data:

8.		Interest expense of $ 210 has been incurred in January on the notes payable.
9.		The insurance for the year 2022 was prepaid on December 31, 2021.
10.		The equipment was acquired on December 31, 2021, and will be depreciated on a straight-line basis over 5 years with a $ 2,760 salvage value.
11.		Employer’s payroll taxes include 7.65% FICA taxes, a 5.4% state unemployment tax, and an 0.6% federal unemployment tax.