a. Salaries accrued: sales salaries, $4,275; officers salaries, $2,17% office sa

Question

a. Salaries accrued: sales salaries, $4,275; officers salaries, $2,17% office salaries, $825. The payroll taxes are immaterial and are not accrued. b. Vacation pay, $13,350. nsive Problem 3 Selected transactions completed by Kornett Company during its first fiscal year ended De cember 31, 2016, 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; miscella- neous 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 in ac- counting for uncollectible receivables.) in full payment. discounted it at 996. Sept. 15. Reinstated the Finley account written off on August 24 and received $1,400 cash 15. Purchased land by issuing a $670,000, 90-day note to Zahorik Co., which 35,000 cash plus receipt of a $100,000, Oct. 17. Sold office equipment in exchange for $1 90-day, 9% note. The equipment had a cost of $320,000 and accumulated depreciation of $64,000 as of October 17 (Continued)

Explanation / Answer

Date Particulars Debit Credit 3-Jan Petty Cash 4500           Cash 4500 for issue of check for petty cash 26-Feb Office supplies 1680 Miscellaneous selling epense 570 Miscellaneous administrative epense 880              Petty Cash 3130 recording expenses incurred 26-Feb Petty Cash 3130           Cash 3130 for issue of check for replenishment of petty cash 14-Apr Merchandise Inventory 31300.00           Accounts Payable 31300 Purchase of merchandise on account 13-May Accounts Payablle 31300         Cash 31300 No discount will be received as payment is beyond discount period 17-May 2-Jun 8% Note receivable 180000         Accounts receivables 180000 Note received 1-Aug Cash 182400.00        8% Note receivable 180000        Interest Income 2400 Payment of note received along with interest for 60 days interest = 180000 x 8% x 60 /360 days 24-Aug Cash 7600 Allowance for doubtful debt 1400            Accounts receivables 9000 Amount written off on accounts receivables as less received 15-Sep Accounts receivables 1400          Allowance for doubtful debt 1400 Reinstating account written off earlier 15-Sep Cash 1400          Accounts receivables 1400 Cash received on account 15-Sep Land account 670000             Short term notes payable 670000 Land purchased by issuing Notes 17-Oct Short term Notes receivables 100000 Cash 135000 Loss on sale of equipment 21000        Equipment 256000 Equipment sold 30-Nov Sales Salaries expense 135000 Office salaries expense 77250          Income Tax witheld payable 39266          Social security tax witheld payable 12735           Medicare tax witheld payable 3184           Payroll expense Payable 157065 Salaries expense Booked 30-Nov Payroll Tax expense 310           Payroll Tax expense payable 310 Tax expense calculated as State Unemployment = 5000 x 5.4 % , = 270 Federal Unemployment = 5000 x 0.8 % = 40 14-Dec Short term notes payable 670000             Cash 670000 Payment of short term note payable 31-Dec Pension expense 190400           Benefits paid 139700           Pension liability 50700 Pension expense recorded

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