Comprehensive Problem 9 Kenseth Corporation’s unadjusted trial balance at Decemb
ID: 2485584 • Letter: C
Question
Comprehensive Problem 9
Kenseth Corporation’s unadjusted trial balance at December 1, 2014, is presented below.
Debit
Credit
The following transactions occurred during December.
Adjustment data:
Income tax expense was $14,940. It was unpaid at December 31.
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.)
Prepare an adjusted trial balance at December 31, 2014.
Prepare a 2014 income statement.
Prepare a 2014 retained earnings statement. (List items that increase retained earnings first.)
Prepare a December 31, 2014, balance sheet. (List current assets in order of iquidity. List property, plant and equipment in order of land, buildings and equipment.)
Debit
Credit
Cash $26,890 Accounts Receivable 35,290 Notes Receivable 8,400 Interest Receivable –0– Inventory 36,210 Prepaid Insurance 3,810 Land 20,200 Buildings 162,000 Equipment 61,000 Patent 10,530 Allowance for Doubtful Accounts $440 Accumulated Depreciation—Buildings 54,000 Accumulated Depreciation—Equipment 24,400 Accounts Payable 28,400 Salaries and Wages Payable –0– Notes Payable (due April 30, 2015) 12,400 Interest Payable –0– Notes Payable (due in 2020) 35,730 Common Stock 59,500 Retained Earnings 56,570 Dividends 14,800 Sales Revenue 917,700 Interest Revenue –0– Gain on Disposal of Plant Assets –0– Bad Debt Expense –0– Cost of Goods Sold 639,600 Depreciation Expense –0– Insurance Expense –0– Interest Expense –0– Other Operating Expenses 61,310 Amortization Expense –0– Salaries and Wages Expense 109,100 Total $1,189,140 $1,189,140Explanation / Answer
Date Particulars Debit Credit 2-Dec Equipment 19200 Cash 19200 equipment purchased, sales tax is capitalised 2-Dec Cash 3500 Accumulated Depreciation - Equipment 1890 Depreciation Expense 430 Gain on Disposal of Plant Asset 820 Equipment 5000 Equipment sold and profit recognised on its sale 15-Dec Accounts Receivables 5310 Sales Revenue 5310 Sale of inventory Cost of Goods Sold 3290 Inventory 3290 Cost of inventory sold transferred to cost of Goods sold 23-Dec Salaries and wages expense 6560 Cash 6560 Salary paid 31-Dec Bad Debt Expense 3850 Allowance for doubtful accounts 3850 Uncollectible accounts receivable recorded 31-Dec Interest Receivable 504 Interest Revenue 504 Amount of interest receivable = 8400 x 8% x 9/12 year 31-Dec Insurance expense 2540 Prepaid Insurance 2540 Insurance expired for 4 months Is calculated as Insurance expired = 3810 x 4 /6 31-Dec Depreciation expense 4360 Accumulated depreciation -Buildings 4360 Depreciation is calculated under straight line method as = ( cost of asset - salvage value) / Life of asset = (162000 - 31200) / 30 = 4360 31-Dec Depreciation expense 10080 Accumulated depreciation -Equipment 10080 Depreciation is calculated under straight line method as = ( cost of asset - salvage value) / Life of asset Remainig cost of asset from previous equipment = 61000 ( opening) - 5000 ( equipment sold) = 56000 salvage value = 10 % = 5600 Depreciation = ( 56000 - 5600) / 5 = 10080 31-Dec Depreciation expense 281 Accumulated depreciation -Equipment 281 Depreciation is calculated under straight line method as = ( cost of asset - salvage value) / Life of asset = (19200 - 2340) / 5 = 3372 per year = 3372 / 12 = 281 per month 31-Dec Amortization expense 1170 Accumulated Amortiztion 1170 Amortization = Cost / life of patent 10530 / 9 31-Dec Salaries and wages expense 2060 Salary and wages payable 2060 Accrues salary expense 31-Dec Interest expense 4813 Interest payable 4813 Short term notes payable = 12400x 10%, = 1240 Long term notes payable = 35730 x 10% = 3573 31-Dec Income Tax expense 14940 Income Tax payable 14940 Accrued income tax expense
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