Konka Kola Corporation prepares quarterly financial statements. The balance sheet at 12/31/13 is presented below.

	Balance Sheet
	12/31/2013

Cash	$24,300		Accounts payable	$22,370
Accounts receivable	22,400		Common stock	85,000
Allowance for doubtful accounts	(1,200)		Retained earnings	23,130
Land	20,000
Equipment	30,000
Accumulated depreciation - equipment	(20,000)
Building	70,000
Accumulated depreciation - building	(15,000)
	$130,500			$130,500

During the first quarter of 2014, the following transactions occurred:

1. Performed services for $140,000 on account.

2. On 2/1/14, collected fees of $12,000 in advance. $1,000 worth of services are to be performed each month from 2/1/14 to 1/30/15.

3. On 2/1/14, purchased equipment for $15,000 plus sales taxes of $750. $3,000 cash was paid with the remaining balance on account. Check #455 was used.

4. Collected $133,000 on 3/5/14 from customers on account.

5. Paid $16,370 on accounts payable. Check #456 was used.

6. Paid operating expenses of $97,500. Check #457 was used.

7. Acquired a patent with a 10-year life for $9,600 cash on 3/1/14. Check #458 was used.

8. Wrote off a receivable of $200 for a customer who went bankrupt.

9. On 3/31/14, KC Corp sold for $2,620 cash equipment which originally cost $13,000. It had an estimated life of 5 years and salvage of $2,000. It had an estimated life of 5 years and a salvage of $2,000. Accumulated depreciation as of 12/31/2013 was $8,000 using the straight line method. (1) Record depreciation on the equipment sold, then (2) record the sale.

10. AJE 3/31/14: Record revenue earned from item 2 above.

11. AJE: At 3/31/14, $26,000 of Accounts Receivable is not yet due. The bad debt percentage for these current receivables is 4%. The remaining balance in Accounts Receivable is past due. The bad debt percentage for these receivables is 23.75%. Record bad debt expense.

HINT: You will need to calculate the balance in accounts receivable before calculating bad debt expense.

12. AJE: Record depreciation as of 3/31/14. The new equipment purchased in February is being depreciated using the double declining balance method over 5 years. The equipment has an estimated salvage value of $1,000. The equipment that was on the books on 12/31 that is still owned by Konka Kola is being depreciated over a 10 year life using straight line with no salvage value.

13. AJE: Depreciation is recorded on the building on a straight-line basis using a 30-year life and a salvage value of $10,000.

14. AJE: Amortization is recorded on the patent.

15. The company reconciles its bank statement every quarter. Information from the 12/31/13 Bank Reconciliation is provided below:

Deposit in transit 12/30/13 $5,000

Outstanding Checks #440 $3,444

#452 333

#453 865

#454 5,845

The Bank statement received for the quarter ended 3/31/14 was:

Beginning balance per bank $ 29,787

Deposits: 1/2/14 $5,000; 2/2/14 $12,000; 3/6/14 $133,000 150,000

Checks: #452 $333; #453 $865; #456 $16,370; #457 $97,500 ( 115,068)

Debit memo: Bank service charge (Record as operating expense) ( 100)

Ending bank balance $ 64,619

16. AJE: Konka Kola Corp