The Clayton Company is a retail company that began operations on October 1, 2018,
when it incorporated in the state of North Carolina. The Clayton Company is authorized to issue
150,000 shares of $1 par value common stock and 40,000 shares of 8%, $40 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.
Nov 15 entry
15: Paid all liabilities associated with the October 31 payroll.
Sample Solution