..ooo Verizon 32%) 8:33 AM edugen.wileyplus.com Kenseth Corporation\'s unadjuste

Question

..ooo Verizon 32%) 8:33 AM edugen.wileyplus.com Kenseth Corporation's unadjusted trial balance at December 1, 2014, is presented below 27.310 Building 60,600 Allowance for Deubtui Acceunts Salaries and wages Payable Netes Payable (due April 30, 20as) Interest Payable Notes Pay able at in 2020) 2015) 1,600 Retained Eamings Dividends 12,100 981 907 400 Interest Revenue Bad Debt Expense Depreciation Expense on Disposal of 631 800 Other Operating Expensers Salaries and Wages Expense The following transactions occurred during December. Dec 2 Kenseth purchased equipment for $15,600, plus sales taxes of $1,200 (all paid in cash). Kenseth sold for $3,550 equipment which originally cost $5,200. Accumulated depreciation on this equipment at January 1, 2014, was $1,850; 2014 depreciation prior to the sale of equipment was $480 5 Kenseth sold for $5,440 on account inventory that cost $3,280. Salaries and wages of $6,500 were paid. Adjustment data: 1. Kenseth estimates that uncollectible accounts receivable at year-end are 2. The note receivable is a one-year, 8% note dated April 1, 2014, No interest has $4,050. been recorded. The balance in prepaid insurance represents payment of a $3,810, 6-month premium on September 1, 2014. The building is being depreciated using the straight-line method over 30 years. The salvage value is $32,100 s. 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. The equipment purchased on December 2, 2014, is being depreciated using the straight-line method over 5 years, with a salvage value of $2,100 The patent was acquired on January 1, 2014, and has a useful life of 9 years from that date.

Explanation / Answer

Kenseth Corporation All Amounts in $ Journal Entries Date Particulars Debit Credit 02/12/2014 Equipment A/c 16800 To Cash A/c 16800 02/12/2014 Accumulated Depreciation - Equipment A/c 2330 Cash A/c 3550 To Equipment A/c 5200 To Gain on Disposal of Plant Assets A/c 680 02/12/2014 Depreciation - Equipment A/c 480 To Accumulated Depreciation - Equipment A/c 480 15/12/2014 Accounts Receivable A/c 5440 To Sales Revenue A/c 5440 15/12/2014 Cost of Goods Sold A/c 3280 To Inventory A/c 3280 23/12/2014 Salaries and Wages Expense A/c 6500 To Cash A/c 6500 Adjustment Entries 31/12/2014 Bad Debts Expense A/c 4050 To Allowance for Doubtful Accounts A/c 4050 Interest Receivable A/c 534 To Interest Revenue A/c 534 Insurance Expense A/c 1905 To Prepaid Insurance A/c 1905 Depreciation Expense A/c 3830 To Accumulated Depreciation - Building A/c 3830 Depreciation Expense A/c 9972 To Accumulated Depreciation - Equipment A/c 9972 Depreciation Expense A/c 245 To Accumulated Depreciation - Equipment A/c 245 Amortisation Expense A/c 1040 To Patents A/c 1040 Interest Expense A/c 3795 To Interest Payable A/c 3795 (Assuming both the Notes Payable were issued on January 1, 2014 @ 8% - notes receivable rate) Trial Balance Particulars Debit Credit Cash 7560 Accounts Receivable 40890 Notes Receivable 8900 Interest Receivable 534 Inventory 32930 Prepaid Insurance 1905 Land 21100 Buildings 147000 Equipment 72200 Patent 8320 Allowance for Doubtful Accounts 4500 Accumulated Depreciation - Building 52830 Accumulated Depreciation - Equipment 32607 Accounts Payable 28400 Salaries and Wages Payable Notes Payable (due April 30, 2015) 11600 Interest Payable 3795 Notes Payable (due in 2020) 35840 Common Stock 53600 Retained Earnings 49810 Dividends 12100 Sales Revenue 912840 Interest Revenue 534 Gain on Disposal of Plant Assets 680 Bad Debt Expense 4050 Cost of Goods Sold 635080 Depreciation Expense 14527 Insurance Expense 1905 Interest Expense 3795 Other Operating Expense 61200 Amortisation Expense 1040 Salaries and Wages Expense 112000 1187036 1187036 Income Statement For The Year Ended December 31, 2014 Sales Revenue 912840 Cost of Goods Sold 635080 Contribution Margin 277760 Interest Revenue 534 Gain on Disposal of Plant Assets 680 Total Income 278974 Bad Debt Expense 4050 Depreciation Expense 14527 Insurance Expense 1905 Interest Expense 3795 Other Operating Expense 61200 Amortisation Expense 1040 Salaries and Wages Expense 112000 198517 Net Income for the year 80457 Statement of Retained Earnings As on December 31, 2014 Opening Balance 49810 Add : Net Income for the year 80457 130267 Less : Dividends 12100 Closing Balance 118167 Balance Sheet As on December 31, 2014 Assets Current Assets Cash 7560 Accounts Receivable 40890 Less : Allowance for Doubtful Accounts 4500 36390 Notes Receivable 8900 Interest Receivable 534 Inventory 32930 Prepaid Insurance 1905 Total Current Assets 88219 Fixed Assets Land 21100 Buildings 147000 Accumulated Depreciation - Building 52830 94170 Equipment 72200 Accumulated Depreciation - Equipment 32607 39593 Patent 8320 Total Assets 251402 Liabilities Current Liabilities Accounts Payable 28400 Notes Payable (due April 30, 2015) 11600 Interest Payable 3795 Total Current Liabilities 43795 Long-Term Liabilities Notes Payable (due in 2020) 35840 Stockholders' Equity Common Stock 53600 Retained Earnings 118167 Total Liabilities and Stockholders' Equity 251402

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