Question

Comprehensive Problem 3
Part 1:

Selected transactions completed by Kornett Company during its first fiscal year ended December 31, 20Y5, were as follows:

1. Journalize the selected transactions. Assume 360 days per year.

If no entry is required, select "No entry required" from the dropdown and leave the amount boxes blank. For a compound transaction, if an amount box does not require an entry, leave it blank.

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

Date	Description	Debit	Credit
Jan. 3

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.

Date	Description	Debit	Credit
Feb. 26

Apr. 14: Purchased $31,300 of merchandise on account, terms 1/10, n/30. The perpetual inventory system is used to account for inventory.

Date	Description	Debit	Credit
Apr. 14

May 13: Paid the invoice of April 14 after the discount period had passed.

Date	Description	Debit	Credit
May 13

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

Date	Description	Debit	Credit
May 17

June 2: Received a 60-day, 8% note for $180,000 on the Ryanair account.

Date	Description	Debit	Credit
June 2

Aug. 1: Received amount owed on June 2 note, plus interest at the maturity date.

Date	Description	Debit	Credit
Aug. 1

Aug. 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.)

Date	Description	Debit	Credit
Aug. 24

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

Date	Description	Debit	Credit
Sept. 15

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

Date	Description	Debit	Credit
Sept. 15

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.

Date	Description	Debit	Credit
Oct. 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

Date	Description	Debit	Credit
Nov. 30

Nov. 30: Journalized the employer's payroll taxes on the payroll.

Date	Description	Debit	Credit
Nov. 30

Dec. 14: Journalized the payment of the September 15 note at maturity.

Date	Description	Debit	Credit
Dec. 14

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

Date	Description	Debit	Credit
Dec. 31

Answer 1

Kornett Company Journal Enteries Date 3.1.20Y5Petty Cash a/c Debit in $ Credit in $ Particulars Dr. 4500 To Cash 4500 (established Petty cash fund 29.2.20Y5Office Supplies Expense a/c Dr, 1680 570 880 Miscellaneous Expense a/c Dr Miscellaneous Administrative Expense a/c Dr To Cash 3130 (Replenished the petty cash fund) 14.4.20Y5 Inventory a/c Dr. 31300 To Accounts Payable 31300 (Purchased Inventory on account) 13.5.20Y5 Accounts Payable a/c Dr. 31300 To Cash 31300 (Paid Accounts Payable) 17.5.20Y5 Cash ac Dr Dr. 21200 Over/Short a/c 40 To Sales 21240 (Sales made on cash 2.6.20Y5 Notes Receivable a/c Dr. 180000 To Accounts Receivable 180000 (Received a 60-day, 8% note on the Ryanair account.) 1.8.20Y5 Cash ac 182400 To Notes Receivable 180000 To Interest Revenue 2400 (Received amount owed on June 2) 180000 x 8% x 60/360-2400

Debit in $ Credit in $ Date 24.8.20Y5Cash a/c Particulars Dr To Accounts Receivable 7600 7600 (Cash from debtors Allowance for Doubtful Accounts a/c Dr 1400 To Accounts Receivable 1400 (Uncollectibles written off) 9000 7600 15.9.20Y5 Accounts Receivable a/c Dr 1400 To Allowance for Doubtful Accounts 1400 (Reinstated the Finley account) Cash a/c (Received cash in full Dr To Accounts Receivable 1400 1400 15.9.20Y5 Land a/c Dr. 654925 Discount on Notes Payable a/c Dr 15075 To Note Payable 670000 (Land acquired on with Note Payable) 17.10.20Y5 Cash ac Dr 135000 100000 64000 21000 Notes Receivable a/c Dr Accumulated Depreciation a/c Loss on Sale a/c Dr Dr. To Office Equipment 320000 (Sold office equipment)

Debit in $ Credit in $ Date 30.11.20Y5 Sales salary expense a/c Particulars Dr Dr. 135000 Office salary expense a/c 77250 To Employee Federal Income Tax Payable To Social Security Tax Payable To Medicare Tax Payable To Salaries Payable 39266 12735 3184 157065 Payroll Tax Expense a/c Dr. 16229 To Social Security Tax Payable To Medicare Tax Payable To State Unemployment Tax Pavable To Federal Unemployment Tax Payable 12735 3184 270 40 14.12.20Y5 Note payable a/c Dr. 670000 To Cash 670000 (payment of the September 15 note) Interest expense a/c (Interest expense recrded Dr. To Discount on note payable 15075 15075 31.12.20Y5 Pension Expenses a/c Dr. 190400 To Cash To Unfunded Pension Liabilit 139700 50700 (pension cost for the year)