Question

prehensive Problem 3 Comprehensi 5. Total assets, $3,569,300 GENERAL LEDGER Selected transactions completed by December 31, 2014, were as follows: ns completed by Kornett Company during its first fiscal year ended December 31, 2014 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; misc neous administrative expense, $880. Apr. 14. Purchased $31,300 of merchandise on account, terms 1/10. n/30. The perpetuan 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. 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 ac- counting for uncollectible receivables.) Sept. 15. Reinstated the Finley account written off on August 24 and received $1,400 cash in full payment. 15. Purchased land by issuing a $670,000, 90-day note to Zahorik Co., which discounted it at 9%. 00012 To Toeb 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 $39,266 Income tax withheld 77,250 Office salaries 12,735 Social security tax withheld $212,250 Medicare tax withheld 3,184 5.4% 0.8% Unemployment tax rates: State unemployment Federal unemployment Amount subject to unemployment taxes: State unemployment Federal unemployment $5,000 5,000 (Continued)

Answer 1

1.

Prepare journal entries as follows:

Date	Account Titles	Debit	Credit
Jan. 03	Petty cash	$4,500
	Cash		$4,500
Fe. 26	Office supplies	$1,680
	Misc. Selling expense	$570
	Misc. Admin expense	$880
	Cash		$3,130
Apr. 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
Jun. 02	Notes receivable	$180,000
	Accounts receivable -Reyanair		$180,000
Aug. 01	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
Sep. 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 ($670000 × 90/360) ×9%		$670,000
Oct. 17	Cash	$135,000
	Notes Receivable	$100,000
	Accumulated depreciation	$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		$12,375
	Medicare tax payable		$3,184
	Salaries payable		$157,065
Nov. 30	Payroll tax expense	$16,229
	Social security tax payable		$12,375
	Medicare tax payable		$3,184
	State Unemployment tax payable ($5000 × 5.4%)		$270
	Federal unemployment tax payable ($5000 × 0.8%)		$40
Dec. 14	Notes payable	$670,000
	Cash		$670,000
Dec. 31	Pension expense	$190,400
	Cash		$139,700
	Unfunded pension liability		$50,700

_________________________________________________________________________

2.

Prepare BRS as follows:

Kornett Company
Bank Reconciliation
Balance as per bank	$283,000	Balance as per books	$245,410
Add:		Add:	-
Deposit in transit, not recorded by bank	$29,500
		Deduct:
Deduct: Outstanding checks	($68,540)	Bank charges	($750)
		Error in recording checks	($700)
Adjusted balance	$243,960	Adjusted balance	$243,960

__________________________________________________________________________________

3.

Journalize the selected transaction as follows:

Trn.	Account Titles	Debit	Credit
a	Bad debt expense	$18,000
	Allowance for doubtfil accounts		$18,000
	($16000+$2000)
b	Cost of Merchandise sold	$3,300
	Merchandise inventory		$3,300
c	Insurance expense	$22,820
	Prepaid insurance		$22,820
d	Office supplies expense	$3,920
	Office supplies		$3,920
e	Depreciation expense-Buildings ($900000 × 4%)	$36,000
	Depreciation expense-Office equipment [($246000-$26000) × 20%]	$44,000
	Depreciation expense-Store equipment [($112000-$12000) × 1/2 × 10%]	$5,000
	Accumulated depreciation -Building		$36,000
	Accumulated depreciation -Office equipment		$44,000
	Accumulated depreciation -Store equipment		$5,000
f	Amortization expense-patents	$6,000
	Patents ($48000/8years)		$6,000
g	Depletion expense	$30,000
	Accumulated depletion [($546000/910000 tons) × 50,000 tons		$30,000
h	vacation pay expense	$10,500
	vacation pay payable		$10,500
i	Product warranty expense	$76,000
	Product warranty payable ($19000000 × 4%)		$76,000
j	Interest receivable	$1,875
	Interest revenue [($100000 × 75/360 × 9%)]		$1,875