Selected transactions completed by Kornett Company during its first fiscal year
ID: 2500164 • Letter: S
Question
Selected transactions completed by Kornett Company during its first fiscal year ended December 31, 2016, were as follows:
Record the following on journal page 22.
Residual
Acquisition
Useful Life
Asset
Cost
Value
Date
in Years
Depreciation Method Used
Kornett Company
POST-CLOSING TRIAL BALANCE
December 31, 2016
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
Jan. 3 Issued a check to establish a petty cash fund of $4,500. Feb. 26 Replenished the petty cash fund, based on the following summary of petty cash receipts: office supplies, $1,680; miscellaneous selling expense, $570; miscellaneous administrative expense, $880. Apr. 14 Purchased $31,300 of merchandise on account, terms 1/10, n/30. The perpetual inventory system is used to account for inventory. May 13 Paid the invoice of April 14 after the discount period had passed. 17 Received cash from daily cash sales for $21,200. The amount indicated by the cash register was $21,240. Jun. 2 Received a 60-day, 8% note for $180,000 on the Ryanair account. Aug. 1 Received amount owed on June 2 note, plus interest at the maturity date. Assume a 360-day year. 24 Received $7,600 on the Finley account and wrote off the remainder owed on a $9,000 accounts receivable balance. (The allowance method is used in accounting for uncollectible receivables.) Sep. 15 Reinstated the Finley account written off on August 24 and received $1,400 cash in full payment. (Record as two entries.)Explanation / Answer
Date
Debit
Credit
Jan3
Petty cash fund
$4500
Bank
$4500
Feb26
office supplies
$1680
selling expense
$570
administrative expense
$880
Petty cash fund
3130
Feb26
Petty cash fund
1370
Bank
1370
April14
Purchase
31,300
Bank
31,300
May 17
Cash
21240
Sales
21200
Misc
40
Jun 2
8% Note
180000
Ryanair account
180000
Aug1
Bank
182400
Interest
2400
8% note
180000
Aug 24
Bank
7600
Bad debt
1400
Account receivable
9000
Sep 15
Bank
1400
Bad debt recovered
1400
2
Bank reconciliation statement
Amount
•
Balance according to the ledger at December 31,
$245,410
•
Add- Checks outstanding at December 31, not cleared by bank hence added back
$68,540
•
Less-Deposit in transit, not recorded by bank
$29,500
•
Less- Bank debit memo for service charges,.
$750
•
Less- check for $12,700 in payment of an invoice was incorrectly recorded in the accounts as $12,000, therefore payment recorded is less by $700, hence deducted
$700
•
Balance according to the bank statement at December 31
$283,000
Date
Debit
Credit
Jan3
Petty cash fund
$4500
Bank
$4500
Feb26
office supplies
$1680
selling expense
$570
administrative expense
$880
Petty cash fund
3130
Feb26
Petty cash fund
1370
Bank
1370
April14
Purchase
31,300
Bank
31,300
May 17
Cash
21240
Sales
21200
Misc
40
Jun 2
8% Note
180000
Ryanair account
180000
Aug1
Bank
182400
Interest
2400
8% note
180000
Aug 24
Bank
7600
Bad debt
1400
Account receivable
9000
Sep 15
Bank
1400
Bad debt recovered
1400
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