Question

Selected transactions completed by Kornett Company during its first fiscal year ended December 31, 20Y8, were as follows:

Jan. 3. Issued a check to establish a petty cash fund of $4,500.

Feb. 26. Replenish the petty cash fund, based in the following summary of petty cash receipts: office supplies, $1,680; miscellaneous selling expense, $570; miscellaneous administrative expense, $880.

April 14. Purchased $31,300 of merchandise on account, terms n/30. The perpetual inventory agatem is used to account for inventory.

May 13. Paid the invoice of April 14.

May 17. Receive cash from daily cash sales for $21,200. The amount indicated by the cash register was $21,240.

June 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.

Aug. 24. Received $7,600 on the Finley account and wrote off the remainder owed in a $9,000 accounts receivable balance. ( The allowance method is used in accounting for uncollectible receivables).

Sept. 15. Reinstated the Finley account written off on August 24 and received $1,400 cash in full payment.

Sept. 15. Purchased land by issuing a $670,000, 90 day note to Zahorik Co., which discounted it at 9%

Oct. 17. Sold office equipment in exchange for $135,000 cash pkus 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 in the following data:

Nov. 30. Journalized the employer's payroll.

Dec. 14. Journalized the payment if the September 15 note at maturity.

Dec. 31. The oension cost for the year was $190,400, of which $139,700 was paid to the pension plan trustee.

Answer 1

Date	General journal	Debit	Credit
Jan 3	Petty cash	$4,500
	Cash		$4,500
Feb 26	Officie supplies	$1,680
	Miscellaneous Selling Expense	$570
	Miscellaneous Administrative Expense	$880
	Cash		$3,130
April 14	Merchandise Inventory	$31,300
	Accounts Payable		$31,300
May 13	Accounts Payable	$31,300
	Cash		$31,300
May 17	Cash	$21,200
	Cash short and over	$40
	Sales		$21,240
June 2	Notes Receivable	$180,000
	Accounts Receivable—Ryanair		$180,000
Aug 1	Cash	$182,400
	Notes Receivable		$180,000
	Interest Revenue		$2,400
Aug 24	Cash	$7,600
	Allowance for Doubtful Accounts	$1,400
	Accounts Receivable—Finley		$9,000
Sept 15	Accounts Receivable—Finley	$1,400
	Allowance for Doubtful Accounts		$1,400
	Cash	$1,400
	Accounts Receivable—Finley		$1,400
Sep 15	Land	$654,925
	Interest Expense	$15,075
	Notes Payable		$670,000
	($670,000 * 90/360 * 9%).
Oct 17	Cash	$135,000
	Notes Receivable	$100,000
	Accumulated Depreciation-Office Equipment	$64,000
	Loss on Sale of Office Equipment	$21,000
	Office Equipment		$320,000
Nov 30	Sales Salaries Expense	$135,000
	Office Salaries Expense	$77,250
	Employees Income Tax Payable		$39,266
	Social Security Tax Payable		$12,735
	Medicare Tax Payable		$3,184
	Salaries Payable		$157,065
Nov 30	Payroll Tax Expense	$16,229
	Social Security Tax Payable		$12,735
	Medicare Tax Payable		$3,184
	State Unemployment Tax Payable [5000*0.054]		$270
	Federal Unemployment Tax Payable[5000*0.008]		$40
Dec 14	Notes Payable	$670,000
	Cash		$670,000
Dec 31	Pension Expense	$190,400
	Cash		$139,700
	Unfunded Pension Liability		$50,700
	(Pension cost of $190,400 funded at $139,700)