2024 – Selected transactions completed by Kornett company during its first fiscal year ended December 31

Selected transactions completed by Kornett company during its first fiscal year ended December 31, 2014 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. 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) Sept. 15. Reinstated

the Finley account written off on August 24 and received $1400 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 $1,00,000, 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 Salaries Deduction Sales

salaries $135,000 Income tax withheld $39,266 Office salaries $77,250 Social security tax withheld $12,735 Total $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. Instructions 1. Journalize the selected transactions. 4. Based on the following selected data, journalize the adjusting entries as of December 31 of the current year: a. Estimated uncollectible accounts at December 31, $16,000,

based on an aging of accounts receivable. The balance of Allowance for Doubtful Accounts at December 31 was $2,000 (debit). 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: Asset Cost Residual Value Useful life Method Building $900,000 0 50 Double-declining Office Equip. $246,000 26,000 5 Straight Store equip 112,000 12,000 10 Straight f.

A patent costing $48,000 when acquired on January 2 has a remaining legal life of 10 years and is expected to have value for eight years. 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. i. A 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. j. Interest was accrued on

the note receivable received on October 17. 5. Based on the following information and the post-closing trial balance shown below, 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 ………. $7,140 Long-term liability …….. 3,360 The unfunded pension liability is a long-term liability. Notes payable: Current liability ……. $ 70,000 Long-term

liability …. 630,000 Kornett Company Post-Closing Trial Balance December 31, 2014