One Product Corp OPC incorporated at the beginning of

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One Product Corp. (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:The following information is relevant to the first month of operations in the following year:•
OPC sell its inventory at $ 150 per unit, plus sales tax of 6%. OPC’s January 1 inventory
balance consists of 180 units at a total cost of $ 12,060. OPC’s policy is to use the FIFO
method, recorded using a perpetual inventory system.• The $ 1,600 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 period, and will be paid on March 31.•
Unearned Revenue is for 30 units ordered and paid for in advance by two customers in late
December. One order of 25 units is to be filled in January, and the other will be filled in
February.• Note 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 Transactions1. On 1/01, OPC
paid employees’ salaries and wages that were previously accrued on December 31.2. A truck
is purchased on 1/02 for $ 10,000 cash. It is estimated this vehicle will be used for 50,000 miles,
after which it will have no residual value.3. Payroll withholdings and employer contributions for
December are remitted on 1/03. 4. OPC declares a $ 0.50 cash dividend on each share of
common stock on 1/04, to be paid on 1/10.5. A $ 950 customer account is written off as
uncollectible on 1/05.6. 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.7. Sales taxes of $ 500 that had been
collected and recorded in December are paid to the state on 1/07.8. On 1/08, OPC issued 300
shares of treasury stock for $ 2,400.9. Collections from customers on account, totaling $ 8,500,
are recorded on 1/09.10. On 1/10, OPC distributes the $ 0.50 cash dividend declared on
January 4. The company’s stock price is currently $ 5 per share.11. OPC purchases on
account and receives 70 units of inventory on 1/11 for $ 4,410. 12. The equipment purchased
last year for $ 25,000 is sold on 1/15 for $ 23,000 cash. Record depreciation for the first half of
January prior to recording the equipment disposal.13. 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.14. Having sold the equipment, OPC pays off the note payable in full on 1/17. The
amount paid is $ 22,585, which includes interest accrued in December and an additional $ 90
interest through January 17. 15. On 1/27, OPC records sales of 30 units of inventory on
account. Sales tax is charged but not yet collected or remitted.16. 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 United States governmental organization that is exempt
from sales tax.17. To obtain funds for purchasing new equipment, OPC issued bonds on 1/30
with a total face value of $ 90,000, stated interest rate of 5 percent, annual compounding, and
six-year maturity date. OPC received $ 81,420 from the bond issuance, which implies a market
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 interest rate of 7 percent.18. On 1/31, OPC records units-of-production depreciation on the
vehicle (truck), which was driven 1,900 miles this month.19. OPC estimates that 2% of the
ending accounts receivable balance will be uncollectible. Adjust the applicable accounts on
1/31, using the allowance method.20. On 1/31, adjust for January rent expired.21. 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.22. Accrue OPC’s
corporate income taxes on 1/31, estimated to be $ 3,750. Required:Part A1. Prepare all January
journal entries and adjusting entries for items (1)–(22).2. If you are completing this problem
manually, set up T-accounts using the December 31 balances as the beginning balances, post
the journal entries from requirement 1, and prepare an unadjusted trial balance at January 31. If
you are completing this problem in Connect using the general ledger tool, this requirement will
be completed using your previous answers.3. Prepare an income statement, statement of
stockholders’ equity, and classified balance sheet at the end of January.4. What was OPC’s
total payroll cost for January?5. Will the carrying value of the bond increase or decrease after
recording interest in February?6. What is the interest payment OPC will need to pay annually on
the bond?7. What was the gain or loss was recognized on the issuance of Treasury Stock on
Jan. 8? Part B (Chapter 11 Supplement B)8. Rather than distribute a cash dividend in January,
OPC considered issuing a 30% stock dividend on common stock. What journal entry would
OPC record had a 30% stock dividend been issued?9. What journal entry would OPC record
had a 10% stock dividend been issued?Part C (Appendix C)10. Show how the total bond
issuance proceeds of $ 81,420 were determined in item 17 by calculating the present value of
(a) the $ 90,000 face value and (b) the annual interest payments.11. Rather than issue bonds to
obtain cash for purchasing new equipment, OPC could have saved up and invested cash over
several years. If OPC can earn 7 percent interest compounded annually, what single lump sum
would it have to invest now to reach $ 98,000 in three years?12. Instead of investing one large
amount of cash, OPC could invest equal amounts over the next three years. If OPC can earn 7
percent interest compounded annually, how much cash would OPC need to invest equally at
the end of each of the next three years to have saved $ 98,000?View Solution:
One Product Corp OPC incorporated at the beginning of last

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