Based on the following data, prepare a bank reconciliation for December 2016. Re
ID: 2482514 • Letter: B
Question
Based on the following data, prepare a bank reconciliation for December 2016. Refer to the Labels and Amount Descriptions list for exact wording of text entries. Enter all amounts as positive numbers. • Balance according to the bank statement at December 31, $283,000. • Balance according to the ledger at December 31, $245,410. • Checks outstanding at December 31, $68,540. • Deposit in transit, not recorded by bank, $29,500. • Bank debit memo for service charges, $750. • A check for $12,700 in payment of an invoice was incorrectly recorded in the accounts as $12,000. 3. Based on the bank reconciliation prepared in (2), journalize the entry or entries to be made by Kornett Company on page 23 of the journal. Kornett Company uses the Miscellaneous Administrative Expense account for bank service charges. 4. Based on the following selected data, journalize the adjusting entries as of December 31, 2016 on page 23 of the journal: • 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). • The physical inventory on December 31 indicated an inventory shrinkage of $3,300. • Prepaid insurance expired during the year, $22,820. • Office supplies used during the year, $3,920. • Depreciation is computed as follows: Residual Acquisition Useful Life Asset Cost Value Date in Years Depreciation Method Used Buildings $900,00 $0 January 2 50 Double-declining-balance Office Equip. 246,000 26,000 January 3 5 Straight-line Store Equip. 112,000 12,000 July 1 10 Straight-line • 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. • 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. • Vacation pay expense for December, $10,500. • 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. • Interest was accrued on the note receivable received on October 17. Assume a 360-day year. * Refer to the Chart of Accounts for exact wording of account titles. 5. Based on the following information and the post-closing trial balance that follows, prepare a balance sheet in report form at December 31, 2016. Be sure to complete the heading of the balance sheet. Enter assets in the order in which they appear in the post-closing trial balance. Refer to information given in the problem and the Labels and Amount Descriptions list for exact wording of text entries. There is no need to include “(current portion)” or a due date with any account titles. The word “Less” and colons will appear automatically. Enter all amounts as positive numbers. • 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, 2016 ACCOUNT TITLE DEBIT CREDIT 1 Petty Cash 4,500.00 2 Cash 243,960.00 3 Notes Receivable 100,000.00 4 Accounts Receivable 470,000.00 5 Allowance for Doubtful Accounts 16,000.00 6 Merchandise Inventory 320,000.00 7 Interest Receivable 1,875.00 8 Prepaid Insurance 45,640.00 9 Office Supplies 13,400.00 10 Land 654,925.00 11 Buildings 900,000.00 12 Accumulated Depreciation-Buildings 36,000.00 13 Office Equipment 246,000.00 14 Accumulated Depreciation-Office Equipment 44,000.00 15 Store Equipment 112,000.00 16 Accumulated Depreciation-Store Equipment 5,000.00 17 Mineral Rights 546,000.00 18 Accumulated Depletion 30,000.00 19 Patents 42,000.00 20 Social Security Tax Payable 25,470.00 21 Medicare Tax Payable 4,710.00 22 Employees Federal Income Tax Payable 40,000.00 23 State Unemployment Tax Payable 270.00 24 Federal Unemployment Tax Payable 40.00 25 Salaries Payable 157,000.00 26 Accounts Payable 131,600.00 27 Interest Payable 28,000.00 28 Product Warranty Payable 76,000.00 29 Vacation Pay Payable 10,500.00 30 Unfunded Pension Liability 50,700.00 31 Notes Payable 700,000.00 32 J. Kornett, Capital 2,345,010.00 33 Totals 3,700,300.00 3,700,300.00
Explanation / Answer
2.
KORNETT COMPANY
BANK RECONCILIATION
December 31, 2016
Balance according to bank statement
$283,000
Add deposit in transit, not recorded by bank
29,500
$312,500
Deduct outstanding checks
68,540
Adjusted balance
$243,960
Balance according to company’s records
$245,410
Deduct:
Bank service charge
750
Error in recording check
700
Adjusted balance
$243,960
3.
Miscellaneous expense ………………………. 750
Accounts payable ……………………………….. 700
Cash ……………………………………………… 1,450
Jan. 3 Petty cash 4,500 Cash 4,500 Feb 26 Office Supplies 1,680 Miscellaneous Selling Expense 570 Miscellaneous Administrative Expense 880 Cash 3,130 Apr. 14 Merchandise Inventory 31,300 Accounts payable 31,300 May 13 Accounts payable 31,300 Cash 31,300 17 Cash 21,200 Cash short and over 40 Sales 21,240 June 2 Notes Receivable 180,000 Accounts receivable - Ryanair 180,000 Aug 1 Cash 182,400 Notes Receivable 180,000 Interest Revenue 2,400 (180,000 x 8% x 60/360 = 2,400) 24 Cash 7,600 Allowance for doubtful accounts 1,400 Accounts receivable - Finley 9,000 Sept. 15 Accounts receivable - Finley 1,400 Allowance for doubtful accounts 1,400 Cash 1,400 Accounts receivable - Finley 1,400 Land 654,925 Interest expense 15,075 Notes payable 670,000 (670,000 x 90/360 x 9%) Oct. 17 Cash 135,000 Notes Receivable 100,000 Accumulated depreciation – office equipment 64,000 Loss on sale of 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 12,735 Medicare tax payable 3,184 Salaries payable 157,065 30 Payroll tax expense 16,229 Social Security tax payable 12,735 Medicare tax payable 3,184 State unemployment tax payable 270 (5,000 x 5.4%) Federal unemployment tax payable 40 (5,000 x 0.8%) Dec. 14 Notes payable 670,000 Cash 670,000 31 Pension expense 190,400 Cash 139,700 Unfunded Pension liability 50,700Related Questions
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