5. Based on the following information and the post-closing trail balance that follows, prepare a balance sheet in report form at December 31 of the current year:
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. Apr. 14. May 13. 17. 2. Received a 60-day, 8% note for $180,000 on the Ryanair account. June Aug. 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) Reinstatedthe 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: 1. 24. Sept. 15. 15. 17. Oct. Nov. 30. Salaries Deductions 135,000 ncome tax withheld 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 Federal unemployment 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. Instructions 1. Tournalize the selected transactions. 2. Based on the following data, prepare a bank reconciliation for December of the current year: Balance according to the bank statement at December 31, $283,000. Balance according to the ledger at December 31, $245,410. Checks outstanding at December 31, $68,540. Deposit in transit, not recorded by bank, $29,500. Bank debit memo for service charges, $750. A check for $12,700 in payment of an invoice was incorrectly recorded in the accounts as $12,000. 3. Based on the bank reconciliation prepared in (2), journalize the entry or entries to be made by Kornett Company. Use the Miscellaneous Administrative Expense account to record bank service charges. 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, $16,000, based on an aging of accounts receivable. The balance of Allowance for Doubtful Accounts at December 31 was $2,000 (debit) B. The physical inventory on December 31 indicated an inventory shrinkage of $3,300. C. Prepaid insurance expired during the year, $22,820. D. Office supplies used during the year, $3,920 E. Depreciation is computed as follows: Residual Acquisition Useful Life Depreciation Method Used Value Asset Buildings Office Equi. 246,000 26000 January 3 Store Equip. Cost Date in Years 5900,000 $ 0January 2 Double-declining-balance Straight-line Straight-line 50 112,000 12,000 July 1 10 F. A patent costing $48,000 when acquired on January 2 has a remaining legal life of 10 years and is expected to have value for 8 years. G. The cost of mineral rights was $546,000. Of the estimated deposit of 910,000 tons of ore, 50,000 tons were mined and sold during the year H. Vacatio n pay expense for December, $10,500. A product warranty was granted beginning December 1 and covering a one-year period. The estimated cost is 4% of sales, which totaled $1,900,000 in December. I. J. Interest was accrued on the note receivable received on October 17 5. Based on the following information and the post-closing trial balance that follows, prepare a balance sheet in report form at December 31 of the current year: The merchandise inventory is stated at cost by the LIFO method. The product warranty payable is a current liability Vacation pay paya Current liability Long-term liability $7,140 3,360 The unfunded pension liability is a long-term liability Notes payable: Current liability Long-term liability 70,000 Kornett Company Post-Closing Trial Balance December 31.20Y5 Debit Balances Credit Balances 4500 243,960 100,000 470,000 Cash Notes Receivable.._... . 16,000 Inventory... 320,000 1875 45,640 13,400 654925 900,000 Buildings 246,000 112,000 546,000 42,000 36,000 44,000 5,000 30,000 Store Equipment._ Mineral Rights 25,470 4,710 40,000 270 40 157,000 131,600 28,000 76,000 10,500 50,700 700,000 500,000 Medicare Tax Payable Employees Federal Income Tax Payable.... . . . . .. State Unemployment Tax Pa Federal Unemployment Tax Payable .. .. . . Interest Payable Retained Earnin 3700300 3,700,300
