Main problem Please do step #4 of instruction below Selected transactions comple

ID: 2600460 • Letter: M

Question

Main problem

Please do step #4 of instruction below

Selected transactions completed by Kornett Company during its first fiscal year ended December 31, 20Y5, were as follows: 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. Purchased $31,300 of merchandise on account, terms 1/10, n/30. The perpetual inventory system is used to account for inventory. Paid the invoice of April 14 after the discount period had passed. Received cash from daily cash sales for $21,200. The amount indicated by the cash register was $21,240. Received a 60-day, 8% note for $180,000 on the Ryanair account. Received amount owed on June 2 note, plus interest at the maturity date. Received $7,600 on the Finley account and wrote off the remainder owed on a $9,000 accounts receiv- able balance. (Theallowance method is used in accounting for uncollectible receivables) Reinstated the Finley account written off on August 24 and received $1,400 cash in full payment. Purchased land by issuing a $670,000, %-day note to Zahorik Co, which discounted it at 9%. Sold office equipment in exchange for $135,000 cash plus receipt of a $100,000, 90-day, 9% note. The equipment had a cost of $320,000 and accumulated depredation of $64,000 as of October 17 Journalized the monthly payroll for November, based on the following data: Apr. 14. 13. 17. 2, 1. 24. May June Aug. Sept. 15. 15. 17. Oct. Nov. 30. Deductions Sales salaries Office salaries 7250 Social security tax withheld $212,250 Medicare tax withheld 39,266 12,735 3,184 Unemployment tax rates: State unemployment 5.4% 0.8% Amount subject to unemployment taxes: $5,000 5,000 30. Journalized the employer's payroll taxes on the payroll. Dec 14. Journalized the payment of the September 15 note at maturity 31· The pension cost for the year was $190,400, of which $139,700 was paid to the pension plan trustee

Explanation / Answer

STEP 4

DEBIT A/C

CREDIT

A/C

DEC 31ST

ESTIMATED UNCOLLECTIBLE DEBTS

16000

BAD DEBTS

ALLOWANCE FOR DOUBTFUL DEBTS

WRITE OFF OF NORMAL LOSS IN INVENTORY

3300

SHRINKAGE EXPENSE

INVENTORY

TRANSFER OF INSURANCE EXPENSE

22820

INSURANCE EXPENSE

PREPAID INSURANCE

TRANSFER OF SUPPLIES USED

3920

SUPPLIES EXPENSE

INVENTORY OF SUPPLIES

DEPRECIATION – BLDG

36000

DEP OF BLDG

ACC DEP OF BLDG

DEPRECIATION OFFICE EQUIPMENT

44000

DEP OF OFFICE RQUIPMENT

ACC DEP OF OFFICE EQUIPMENT

DEPRECIATION STORES EQUIPMENT

5000

DEP OF STORES RQUIPMENT

ACC DEP OF STORES EQUIPMENT

WRITE OFF OF EXPECTED FALL IN VALUE OF PATENT

6000

AMORTIZATION OF PATENT

ACC AMORT OF PATENT

Write off of Ore extracted during year

30000

Extraction of mineral

Mineral Rights

Creation of vacation pay December

10500

Salaries & wages expense

Salaries & wages payable

Provision of Product warranty for December

76000

Warranty expense

Provision of product warranty

Interest accrued on Note receivable on Oct 17th

7500

Note Receivable

Interest Income