made by Kornett Company 4. Based on the following selected data, journalize the
ID: 2479493 • Letter: M
Question
made by Kornett Company 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 Doubeful 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 Residual Acquisition Useful Life Date Depreciation Methed Used in YearS Cost Value lanuary 2 Asset Buildings Office Equip 246,000 26,000 January 3 Store Equip 112,000 12,000July f. A pa Double-declining balance Straight-line Straight-line 50 $900,000 sOJanuary 2 10 tent costing $48,000 when acquired on January 2 has a remaining legal life of ons 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 of ore, 50,000 tons were mined and sold during the year h. Vacation pay expense for December, S10,500 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 Decembe rar i Interest was accrued on the note recelvable received on October 17,Explanation / Answer
4) a) Allowance for Doubtful Debts ( P&L) Dr 18000 Allowance for Doubtful Debts ( BS) Cr 18000 ( To record allowance for doubtful debt 16000+2000) b) Loss on inventory Dr 3300 Inventory Cr 3300 ( To record for loss on inventory) c) Insurance Expense Dr 22820 Prepaid Insurance Cr 22820 ( To record expired insurance for the year) d) Supplies Expense Dr 3920 Supplies Cr 3920 To record office supplies expense for the year) e) Depriciation - Building Dr Depriciation - Office equipment Dr Depriciation - store equipment Dr Accumulated depriciation - Building Cr Accumulated depriciation - Office equipCr Cr Accumulated depriciation - Store equipCr Cr To record depriciation for the year) Working Building - double declining SLM Depriciation - 900000/50 = 18000 SLM Rate = 18000 / 900000 * 100 = 2% Double declining rate = 2 * SLM Rate = 2*2 = 4% Building depriciation = 900000 * 4%=36000 ( Acquisition January 2) Office equipment SLM (acquisition date January 3) Depriciation = ( 246000 - 26000) /5 = 44000 Store equipment SLM ( acquisition date July 1) Depriciation = ( 112000 - 12000) /10 = 10000 Depriciation for 6 months = 10000 / 2 = 5000 f) Amortization - patent Dr 6000 Accumulated Amortizatiomn - Patent Cr 6000 ( To record amortization of patent for the year 48000/8) g) Cost of goods sold - mineral ore Dr 30000 Inventory - mineral ore Cr 30000 ( To record of goods sold 546000/910000*50000) h) Vacation pay expense Dr 10500 Expense payable Cr 10500 ( To accrue vacation payable) i) Warranty expense Dr 63333.33 Warranty Payable Cr 63333.33 (To record warranty exoense for the month 1900000*4%/12) j) Interest receivable Dr 750 Interest Income Cr 750 To record interest income for the month 100000*9%/12)
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