Kenseth Corporation’s unadjusted trial balance at December 1, 2014, is presented
ID: 2483862 • Letter: K
Question
Kenseth Corporation’s unadjusted trial balance at December 1, 2014, is presented below.
Debit Credit
Cash $25,980
Accounts Receivable 36,890
Notes Receivable 8,800
Interest Receivable –0–
Inventory 36,340
Prepaid Insurance 3,510
Land 20,400
Buildings 159,000
Equipment 61,600
Patent 10,710
Allowance for Doubtful Accounts $540
Accumulated Depreciation—Buildings 53,000
Accumulated Depreciation—Equipment 24,640
Accounts Payable 27,700
Salaries and Wages Payable –0–
Notes Payable (due April 30, 2015) 11,800
Interest Payable –0–
Notes Payable (due in 2020) 35,330
Common Stock 57,200
Retained Earnings 20,490
Dividends 12,100
Sales Revenue 949,500
Interest Revenue –0–
Gain on Disposal of Plant Assets –0–
Bad Debt Expense –0–
Cost of Goods Sold 637,400
Depreciation Expense –0–
Insurance Expense –0–
Interest Expense –0–
Other Operating Expenses 61,070
Amortization Expense –0–
Salaries and Wages Expense 106,400
Total $1,180,200 $1,180,200
The following transactions occurred during December.
Dec. 2 Kenseth purchased equipment for $18,000, plus sales taxes of $1,200 (all paid in cash).
2 Kenseth sold for $3,570 equipment which originally cost $5,200. Accumulated depreciation on this equipment at January 1, 2014, was $2,000; 2014 depreciation prior to the sale of equipment was $490.
15 Kenseth sold for $5,470 on account inventory that cost $3,440.
23 Salaries and wages of $6,350 were paid.
Adjustment data:
1. Kenseth estimates that uncollectible accounts receivable at year-end are $4,060.
2. The note receivable is a one-year, 8% note dated April 1, 2014. No interest has been recorded.
3. The balance in prepaid insurance represents payment of a $3,510, 6-month premium on September 1, 2014.
4. The building is being depreciated using the straight-line method over 30 years. The salvage value is $31,500.
5. The equipment owned prior to this year is being depreciated using the straight-line method over 5 years. The salvage value is 10% of cost.
6. The equipment purchased on December 2, 2014, is being depreciated using the straight-line method over 5 years, with a salvage value of $2,280.
7. The patent was acquired on January 1, 2014, and has a useful life of 9 years from that date.
8. Unpaid salaries at December 31, 2014, total $2,120.
9. Both the short-term and long-term notes payable are dated January 1, 2014, and carry a 10% interest rate. All interest is payable in the next 12 months.
10 Income tax expense was $13,150. It was unpaid at December 31.
Prepare journal entries for the transactions listed above and adjusting entries
Prepare journal entries for the transactions listed above and adjusting entries. (Credit account titles are automatically indented when amount is entered. Do not indent manually.)
Date
Account Titles and Explanation
Debit
Credit
Dec. 2
Dec. 2
Dec. 15
Dec. 23
Dec. 31
1.
2.
3.
4.
5.
6.
7.
8.
9.
10.
Prepare an adjusted trial balance at December 31, 2014.
KENSETH CORPORATION
Adjusted Trial Balance
December 31, 2014
Debit
Credit
KENSETH CORPORATION
Income Statement
For the Year Ended December 31, 2014
Date
Account Titles and Explanation
Debit
Credit
Dec. 2
Dec. 2
(To record depreciation expense on equipment.) (To record sale of equipment.)Dec. 15
(To record sales revenue.) (To record cost of goods sold.)Dec. 23
Dec. 31
1.
2.
3.
4.
5.
6.
7.
8.
9.
10.
Explanation / Answer
Journal entries and the adjusting journal entries are recorded as under:
Date Particulars L.F Amount ($) Amount ($) Dec-02 Equipment 18,000 Sales Tax 1,200 Cash 19,200 (For equipment purchased) Dec-02 Depreciation 490 Accumulated dep-Equipment 490 (For depreciation for 2014 recorded) Dec-02 Cash 3,570 Accumulated dep-Equipment 2,490 Equipment 5,200 Gain on sale of equipment 860 (For equipment sold) Dec-15 Accounts Receivable 5470 Sales revenue 5470 (For goods sold) Dec-15 Cost of goods sold 3,440 Inventory 3,440 (For cost recorded) Dec-23 Salaries and wages 6,350 Cash 6,350 (For salaries and wages recorded) Adjustments 1 Bad debt expense 3520 Allowance for doubtful accounts 3520 (For bad debt expense recorded) 4,060-540 2 Interest Receivable 528 Interest Revenue 528 (For interest on note recorded) 8,800*8%*9/12 3 Insurance Prepaid insurance 2,340 (For 4 month insurance due) 2,340 3,510*4/6 4 Depreciation 4,250 Accumulated depreciation- Building 4,250 (For deprecaition on building recorded) (159,000-31,500)/30 5 Depreciation 10,152 Accumulated dep-Equipment 10,152 (For dep on equipment recorded) 61,600-5,200 = 56,400 56,400*10% = 5,640 61,600-5,200-5,640 = 50,760 10152 6 Depreciation 262 Accumulated dep-Equipment 262 (For dep on equipment recorded) (18,000-2280)/5 *1/12 7 Amortization expense-Patents 1190 patents 1190 (For patents amortized) 10,710/9 8 Salaries expense 2,120 salaries payable 2,120 (For unpaid salaries) 9 Interest expense 4,713 Interest payable 4,713 (For interest accrued) (11,800+35,330)*10% 10 Income tax expense 13,150 Income tax payable 13,150 (For income tax expense recorded)Related Questions
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