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 n/30. The perpetual inventory system is used to account for inventory. May 13. Paid the invoice of April 14. 17. Received 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. 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.) Sept. 15. Reinstated the Finley account written off on August 24 and received S1,400 cash in full payment. 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 plus receipt of a $100,000, 90-day, 9% note. The equip- ment 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 $39,266 12,735 $135,000 Income tax withheld Office salaries 250ךר7 $212,250 Social security tax withheld Medicare tax withheld 3,184 Unemployment tax rates: State unemployment Federal unemployment Amount subject to unemployment taxes: State unemployment Federal unemployment 5.4% 0.8% $5,000 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. Residual Value Acquisition Date Useful Life Depreciation Method Used Asset Cost in Years $900,000 Buildings Office Equip. January 2 January 3 July 1 Double-declining-balance Straight-line Straight-line 50 246,000 26,000 5 Store Equip. 12000ו 12,000 10 G. The cost of mineral rights was $546,000. Of the estimated deposit of 910,000 tons of ore, 50,000 tons were mined and sold during the year. H. Vacation pay expense for December, $10,500. LA product warranty was granted beginning December 1 and covering a one-year period. The estimated cost is 4% of sales, which totaled $1,900.000 in December. 1. Interest was accrued on the note receivable received on October 17. 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: The merchandise inventory is stated at cost by the LIFO method. The product warranty payable is a current liability. Vacation pay payable: Current liability Long-term lkability $7,140 3,360 The unfunded pension lability is a long-term liability. Notes payable Current liability Long-term liability $ 70,000 630,000 Kornett Company Post-Closing Trial Balance December 31, 20YS Debit Balances Credit Balances 4,500 Petty Cash Cash Notes Receivable. 243,960 100,000 Accounts Receivable.. Allowance for Doubtful Accounts. Inventory.... Interest Receivable Prepaid Insurance. Office Supplies.. Land .. Buildings Accumulated Depreciation-Buildings.. Office Equipment. Accumulated Depreciation-Office Equipment.. Store Equipment... Accumulated Depreciation-Store Equipment. Mineral Rights .. Akcumulated Depletion. 470,000 16,000 320,000 1,875 45,640 13.400 654,925 900,000 36,000 246,000 44,000 112.000 5,000 546,000 30,000 Patents.. 42,000 Social Security Tax Payable.. Medicare Tax Payable.. Employees Federal Income Tax Payable State Unemployment Tax Payable Federal Unemployment Tax Payable Salaries Payable.... Accounts Payable. Interest Payable... Product Warranty Payable... Vacation Pay Payable. Unfunded Pension Liability Notes Payable..... Common Stock. . Retained Earnings. 25,470 4,710 40,000 270 40 ............ ......... 157,000 131,600 28,000 76,000 10,500 50,700 700,000 500,000 1,845,010 3,700,300 ...... ......... 3,700,300
Selected transactions completed by Kornett Company during its first fiscal year ended December 31, 20Y5 , were as follows:
Instructions
1. Journalize the selected transactions.
2. Based on the following data, prepare a bank reconciliation for December of the current year:
- Balance according to the bank statement at December 31, $283,000.
- Balance according to the ledger at December 31, $245,410.
- Checks outstanding at December 31. $68,540.
- Deposit in transit, not recorded by bank, $29,500.
- Bank debit memo for service charges , $750.
- A check for $12,700 in payment of an invoice was incorrectly recorded in the accounts as $12,000.
3. Based on the bank reconciliation prepared in (2), journalise the entry or entries to be made by Kornett Company.Use the Miscellaneous Administrative Expense account to record bank service charges.
4. Based on the following selected data, journalize the
A. Estimated uncollectible accounts at December 31 , $16,000, based on an aging of
B. The physical inventory on December 31 indicated an inventory shrinkage of $3,300.
c. Prepaid insurance expired during the year, $22,820.
D. Office supplies used during the year , $3,920.
E. Depreciation is computed as follows:
F. A patent costing $48,000 when acquired on January 2 has a remaining legal lie of 10 years and is expected to have value for 18 years.
![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 n/30. The perpetual inventory system is used to
account for inventory.
May 13. Paid the invoice of April 14.
17. Received 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.
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.)
Sept. 15. Reinstated the Finley account written off on August 24 and received S1,400 cash in full payment.
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 plus receipt of a $100,000, 90-day, 9% note. The equip-
ment 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
$39,266
12,735
$135,000
Income tax withheld
Office salaries
250ךר7
$212,250
Social security tax withheld
Medicare tax withheld
3,184
Unemployment tax rates:
State unemployment
Federal unemployment
Amount subject to unemployment taxes:
State unemployment
Federal unemployment
5.4%
0.8%
$5,000
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.
Residual
Value
Acquisition
Date
Useful Life
Depreciation
Method Used
Asset
Cost
in Years
$900,000
Buildings
Office Equip.
January 2
January 3
July 1
Double-declining-balance
Straight-line
Straight-line
50
246,000
26,000
5
Store Equip.
12000ו
12,000
10](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2F04be1318-ce37-4287-8b88-f975335015df%2F9b794878-9715-4454-984b-2f40f4da2216%2Ff0nj06.png&w=3840&q=75)
![G. The cost of mineral rights was $546,000. Of the estimated deposit of 910,000 tons of ore, 50,000 tons were
mined and sold during the year.
H. Vacation pay expense for December, $10,500.
LA product warranty was granted beginning December 1 and covering a one-year period. The estimated cost
is 4% of sales, which totaled $1,900.000 in December.
1. Interest was accrued on the note receivable received on October 17.
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:
The merchandise inventory is stated at cost by the LIFO method.
The product warranty payable is a current liability.
Vacation pay payable:
Current liability
Long-term lkability
$7,140
3,360
The unfunded pension lability is a long-term liability.
Notes payable
Current liability
Long-term liability
$ 70,000
630,000
Kornett Company
Post-Closing Trial Balance
December 31, 20YS
Debit
Balances
Credit
Balances
4,500
Petty Cash
Cash
Notes Receivable.
243,960
100,000
Accounts Receivable..
Allowance for Doubtful Accounts.
Inventory....
Interest Receivable
Prepaid Insurance.
Office Supplies..
Land ..
Buildings
Accumulated Depreciation-Buildings..
Office Equipment.
Accumulated Depreciation-Office Equipment..
Store Equipment...
Accumulated Depreciation-Store Equipment.
Mineral Rights ..
Akcumulated Depletion.
470,000
16,000
320,000
1,875
45,640
13.400
654,925
900,000
36,000
246,000
44,000
112.000
5,000
546,000
30,000
Patents..
42,000
Social Security Tax Payable..
Medicare Tax Payable..
Employees Federal Income Tax Payable
State Unemployment Tax Payable
Federal Unemployment Tax Payable
Salaries Payable....
Accounts Payable.
Interest Payable...
Product Warranty Payable...
Vacation Pay Payable.
Unfunded Pension Liability
Notes Payable.....
Common Stock. .
Retained Earnings.
25,470
4,710
40,000
270
40
............
.........
157,000
131,600
28,000
76,000
10,500
50,700
700,000
500,000
1,845,010
3,700,300
......
.........
3,700,300](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2F04be1318-ce37-4287-8b88-f975335015df%2F9b794878-9715-4454-984b-2f40f4da2216%2Fw9pfjjr_processed.png&w=3840&q=75)
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