In: Accounting
Selected transactions completed by Kornett Company during its first fiscal year ended December 31, 20Y5, were as follows:
Jan. | 3 | Issued a check to establish a petty cash fund of $4,500. |
Feb. | 26 | Replenished the petty cash fund, based on the following summary of petty cash receipts: office supplies, $1,680; miscellaneous selling expense, $570; miscellaneous administrative expense, $880. |
Apr. | 14 | Purchased $31,300 of merchandise on account, terms 1/10, n/30. The perpetual inventory system is used to account for inventory. |
May | 13 | Paid the invoice of April 14 after the discount period had passed. |
17 | Received cash from daily cash sales for $21,200. The amount indicated by the cash register was $21,240. | |
Jun. | 2 | Received a 60-day, 8% note for $180,000 on the Ryanair account. |
Aug. | 1 | Received amount owed on June 2 note, plus interest at the maturity date. Assume a 360-day year. |
24 | Received $7,600 on the Finley account and wrote off the remainder owed on a $9,000 accounts receivable balance. (The allowance method is used in accounting for uncollectible receivables.) | |
Sep. | 15 | Reinstated the Finley account written off on August 24 and received $1,400 cash in full payment. (Record as two entries.) |
Record the following on journal page 22.
Sep. | 15 | Purchased land by issuing a $670,000, 90-day note to Zahorik Co., which discounted it at 9%. Assume a 360-day year. |
Oct. | 17 | Sold office equipment in exchange for $135,000 cash plus receipt of a $100,000, 90-day, 9% note. The equipment had a cost of $320,000 and accumulated depreciation of $64,000 as of October 17. |
Nov. | 30 | Journalized the monthly payroll for November, based on the following data: |
Salaries: | Deductions: | ||
Sales salaries | $135,000 | Income tax withheld | $39,266 |
Office salaries | 77,250 | Social security tax withheld | 12,735 |
$212,250 | Medicare tax withheld | 3,184 |
Unemployment Tax rates: | |
State unemployment | 5.4% |
Federal unemployment | 0.8% |
Amount subject to unemployment taxes: | |
State unemployment | $5,000 |
Federal unemployment | 5,000 |
30 | Journalized the employer’s payroll taxes on the payroll. | |
Dec. | 14 | Journalized the payment of the September 15 note at maturity. |
31 | The pension cost for the year was $190,400, of which $139,700 was paid to the pension plan trustee. |
Required: | |||||||||||||
1. | Journalize the selected transactions, starting on page 21 of the journal.* | ||||||||||||
2. | Based on the following data, prepare a bank reconciliation for
December of the current year. Refer to the Labels and Amount
Descriptions list for exact wording of text entries. Enter all
amounts as positive numbers.
|
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3. | Based on the bank reconciliation prepared in (2), journalize the entry or entries to be made by Kornett Company on page 23 of the journal. Use the Miscellaneous Administrative Expense account to record bank service charges. Round your answers to the nearest dollar. | ||||||||||||
4. | Based on the following selected data, journalize the adjusting
entries as of December 31 of the current year on page 23 of the
journal:
|
Residual |
Acquisition |
Useful Life |
|||
Asset |
Cost |
Value |
Date |
in Years |
Depreciation Method Used |
Buildings | $900,000 | $0 | January 2 | 50 | Double-declining-balance |
Office Equip. | 246,000 | 26,000 | January 3 | 5 | Straight-line |
Store Equip. | 112,000 | 12,000 | July 1 | 10 | Straight-line |
|
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5. | Based on the following information and the post-closing trial
balance that follows, prepare a balance sheet in report form at
December 31 of the current year. Be sure to complete the heading of
the balance sheet. Enter assets in the order in which they appear
in the post-closing trial balance. Refer to information given in
the problem and the Labels and Amount Descriptions list for exact
wording of text entries. There is no need to include “(current
portion)” or a due date with any account titles. For those boxes in
which you must enter subtracted or negative numbers use a minus
sign. Round your answers to the nearest dollar
|
Kornett Company
POST-CLOSING TRIAL BALANCE
December 31, 20Y5
ACCOUNT TITLE | DEBIT | CREDIT | |
---|---|---|---|
1 |
Petty Cash |
4,500.00 |
|
2 |
Cash |
243,960.00 |
|
3 |
Notes Receivable |
100,000.00 |
|
4 |
Accounts Receivable |
470,000.00 |
|
5 |
Allowance for Doubtful Accounts |
16,000.00 |
|
6 |
Inventory |
320,000.00 |
|
7 |
Interest Receivable |
1,875.00 |
|
8 |
Prepaid Insurance |
45,640.00 |
|
9 |
Office Supplies |
13,400.00 |
|
10 |
Land |
654,925.00 |
|
11 |
Buildings |
900,000.00 |
|
12 |
Accumulated Depreciation-Buildings |
36,000.00 |
|
13 |
Office Equipment |
246,000.00 |
|
14 |
Accumulated Depreciation-Office Equipment |
44,000.00 |
|
15 |
Store Equipment |
112,000.00 |
|
16 |
Accumulated Depreciation-Store Equipment |
5,000.00 |
|
17 |
Mineral Rights |
546,000.00 |
|
18 |
Accumulated Depletion |
30,000.00 |
|
19 |
Patents |
42,000.00 |
|
20 |
Social Security Tax Payable |
25,470.00 |
|
21 |
Medicare Tax Payable |
4,710.00 |
|
22 |
Employees Income Tax Payable |
40,000.00 |
|
23 |
State Unemployment Tax Payable |
270.00 |
|
24 |
Federal Unemployment Tax Payable |
40.00 |
|
25 |
Salaries Payable |
157,000.00 |
|
26 |
Accounts Payable |
131,600.00 |
|
27 |
Interest Payable |
28,000.00 |
|
28 |
Product Warranty Payable |
76,000.00 |
|
29 |
Vacation Pay Payable |
10,500.00 |
|
30 |
Unfunded Pension Liability |
50,700.00 |
|
31 |
Notes Payable |
700,000.00 |
|
32 |
Common Stock |
500,000.00 |
|
33 |
Retained Earnings |
1,845,010.00 |
|
34 |
Totals |
3,700,300.00 |
3,700,300.00 |