Stan Styka opened a small dryer repair shop Styka Repair

Stan Styka opened a small dryer repair shop, Styka Repair Shop, on January 2, 2014. The shop
also sells a limited number of dryer parts. In January 2015, Styka realized he had never filed
any tax reports for his business and therefore probably owes a considerable amount of taxes.
Since he has limited experience in running a business, he has brought you all his business
records, including a checkbook, canceled checks, deposit slips, suppliers’ invoices, a notice of
annual property taxes of $2,310 due to the city, and a promissory note to his father-in-law for
$2,500. He wants you to determine what his business owes the government and other parties
(but not employees).You analyze all his records and determine the following as of December
31, 2014:Unpaid invoices for dryer parts ........ $ 9,000Parts sales (excluding sales tax) .......
44,270Cost of parts sold ............. 31,125Workers’ salaries ............. 18,200Repair revenues
............. 60,300Current assets .............. 16,300Dryer parts inventory ........... 11,750You learn
that the company has deducted $476 from the two employees’ salaries for federal income
taxes owed to the government. The current Social Security tax is 6.2 percent on maximum
earnings of $110,100 for each employee, and the current Medicare tax is 1.45 percent (no
maximum earnings). The FUTA tax is 5.4 percent to the state and .8 percent to the federal
government on the first $7,000 earned by each employee, and each employee earned more
than $7,000. Styka has not filed a sales tax report to the state (5 percent of sales).Required1.
Determine Styka Repair Shop’s current liabilities as of December 31, 2014.2. What additional
information would you want from Styka to satisfy yourself that all current liabilities have been
identified?3. Evaluate Styka’s liquidity by calculating working capital, payables turnover, and
days’ payable. (Round to one decimal place.) Comment on the results. (Assume average
accounts payable were the same as year-end accounts payable.)View Solution:
Stan Styka opened a small dryer repair shop Styka Repair
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