Selected transactions completed by Calico Interiors, Inc., during its first fiscal year ending December 31 were as follows: Jan. 2. Issued a check to establish

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Selected transactions completed by Calico Interiors, Inc., during its first fiscal year ending December 31 were as follows:

Jan. 2. Issued a check to establish a petty cash fund of $800.

Mar. 1. Replenished the petty cash fund, based on the following summary of petty cash receipts: office supplies, $265; miscellaneous selling expense, $304; miscellaneous administrative expense, $158.

Apr. 5. Purchased $10,000 of merchandise on account, terms 1/10, n/30. The perpetual inventory system is used to account for inventory.

May 5. Paid the invoice of April 5 after the discount period had passed.

10. Received cash from daily cash sales for $8,480. The amount indicated by the cash register was $8,490.

June 2. Received a 60-day, 7.2% note for $50,000 on account.

Aug. 1. Received amount owed on June 2 note, plus interest at the maturity date.

3. Received $1,400 on account and wrote off the remainder owed on a $2,000 accounts receivable balance. (The allowance method is used in accounting for uncollectible receivables.)

28. Reinstated the account written off on August 3 and received $600 cash in full payment.

Sept. 2. Purchased land by issuing a $120,000, 90-day note to Ace Development Co., which discounted it at 6%.

Oct. 2. Traded office equipment for new similar equipment with a list price of $135,000. A trade-in allowance of $66,000 was received on the old equipment that had cost $96,000 and had accumulated depreciation of $35,000 as of October 1. A 120-day, 9% note was issued for the balance owed.

Nov. 30. Journalized the monthly payroll for November, based on the following data:

30. Journalized the employers payroll taxes on the payroll.
Dec. 1. Journalized the payment of the September 2 note at maturity.
30. The pension cost for the year was $65,000, of which $61,300 was paid to the pension plan trustee.
Instructions
1. Journalize the selected transactions.
2. Based on the following data, prepare a bank reconciliation for
December of the current year:
a. Balance according to the bank statement at December 31, $105,700.
b. Balance according to the ledger at December 31, $93,600.
c. Checks outstanding at December 31, $22,680.
d. Deposit in transit, not recorded by bank, $10,400.
e. Bank debit memorandum for service charges, $80.
f. A check for $110 in payment of an invoice was incorrectly recorded in the accounts as $10.
3. Based on the bank reconciliation prepared in (2), journalize the entry or entries to be made by Calico Interiors, Inc.
4. Based on the following selected data, journalize the adjusting entries as of December 31 of the current year:
a. Estimated uncollectible accounts at December 31, $5,980, based on an aging of accounts receivable. The balance of Allowance for Doubtful Accounts at December 31 was $500 (debit).
b. The physical inventory on December 31 indicated an inventory
shrinkage of $1,260.
c. Prepaid insurance expired during the year, $14,300.
d. Office supplies used during the year, $5,680.
e. Depreciation is computed as follows:

f. A patent costing $42,900 when acquired on January 2 has a remaining legal life of 9 years and is expected to have value for 6 years.
g. The cost of mineral rights was $105,000. Of the estimated deposit of 42,000 tons of ore, 6,000 tons were mined during the year.
h. Total vacation pay expense for the year, $11,400.
i. A product warranty was granted beginning December 1 and covering a one-year period. The estimated cost is 2.5% of sales, which totaled $568,000 in December.
j. Interest was accrued on the note payable issued on October 2.
5. Based on the following information and the post-closing trial balance shown below, prepare a balance sheet in report form at December 31 of the current year.
Notes receivable is a current asset.
The merchandise inventory is stated at cost by the LIFO method. The product warranty payable is a current liability.
Vacation pay payable: Current liability ------------------$10,000
Long-term liability --------------- 1,400
The unfunded pension liability is a long-term liability.
Notes payable: Current liability ----------------$69,000
Long-term liability ------------ 26,000
6. On February 7 of the following year, the merchandise inventory was destroyed by fire. Based on the following data obtained from the accounting records, estimate the cost of the merchandise destroyed:
Jan. 1 Merchandise inventory -------------$140,600
Jan. 1-Feb. 7 Purchases (net)------------ 246,720
Jan. 1-Feb. 7 Sales (net) ------------------ 430,000
Estimated gross profit rate ---------------- 40%

Salaries Deductions Sales salaries Office salaries Income tax withheld Social security tax S13,650 22,500 $65,000 withheld Medicare tax withheld 3,770 975 Unemployment tax rates: State unemployment Federal unemployment 3.8% 0.8% Amount subject to unemployment taxes: State unemployment Federal unemployment $1,000 1,000 Depreciation Method Used Residual Acquisition Useful Life Asset Cost Value Date in Years 50 traight-line Straight-line 0 January 2 Buildings Office Equip 130,000 14,000 October 2 Store Equip. 42.00010,000 anuary 3 Declining-balance (at twice the straight-line rate) Calico Interiors, Inc. Post-Closing Trial Balance December 31, 2006 800 93,420 40,000 Cash .. Allowance for Doubtful Accounts ._ . . . . . . -.. .._... .. 5,980 Prepaid Insurance Office Supplies 28,600 7,100 Buildings.. .320,000 6,400 5,800 10,500 15,000 Accumulated Depreciation-Office Equipment . ....42,000 Accumulated Depletion Patents Social Security Tax Payable Medicare Tax Payable.. . . Employees Federal Income Tax Payable .. . . . . . . . .. . . State Unemployment Tax Payable . . . . . . . .._. . . 35,750 7,772 2,010 14,070 .. . 6 67,000 125,300 1,553 14,200 11,400 3,700 95,000 878,046 1,263,770 Product Warranty Payable . . Notes Payable . . .. 1,263,770