Konkweiser Inc. prepares quarterly financial statements. The balance sheet at 12/31/15 is presented below.

	Balance Sheet 12/31/2015
Cash $ 24,300		Accounts payable $12,370
Accounts receivable 22,400		Common stock 90,000
Allowance for doubtful accounts (1,200)		Retained earnings 53,130
Equipment 20,000		$155,500
Accumulated depreciation - equipment (15,000)
Land 20,000
Building 100,000
Accumulated depreciation - building (15,000)
	$ 155,500

During the first quarter of 2016, the following transactions occurred:

1. Konkweiser performed services during the first quarter for $140,000 on account.

2. On 2/1/16, Konkweiser collected fees of $12,000 in advance for $1,000 of services to be performed each month from 2/1/16 to 1/30/17.

3. On 2/1/16, Konkweiser purchased computer equipment for $9,000 plus sales taxes of $600. $3,000 cash was paid with the rest on account. Check #455 was used.

4. Konkweiser collected $133,000 on 3/5/16 from customers on account.

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

6. Paid other operating expenses of $97,525. Check #457 was used.

7. Acquired a patent with a 10-year life for $9,600 cash on 3/1/16. Check #458 was used.

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

9. On 3/31/16, Konkweiser sold for $1,620 cash equipment which originally cost $11,000. It had an estimated life of 5 years and salvage of $1,000. Accumulated depreciation as of 12/31/15 was $8,000 using the straight line method. Record depreciation on the equipment sold, then record the sale.

10. AJE: Record revenue earned from item 2 above.

11. AJE: $26,000 of accounts receivable at 3/31/16 are not due yet. The bad debt percentage for these is 4%. The balance of A/R are past due. The bad debt percentage for these is 23.75%. Record bad debt expense. HINT: You will need to compute the balance in accounts receivable before calculating this.

12. AJE: Depreciation is recorded on the equipment still owned at 3/31/16. The new equipment purchased in February is being depreciated on a double declining basis over 5 years and salvage value was estimated at $1,000. The old equipment still owned 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 based on 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 12/31/15 Bank Reconciliation is:

Deposit in transit: 12/30/15 $5,000

Outstanding Checks #440 3,444

#452 333

#453 865

#454 5,845

The Bank statement received for the quarter ended 3/31/16 is as follows:

Beginning balance per bank $ 29,787

Deposits: 1/2/16 $5,000, 2/2/16 $12,000, 3/6/16 $133,000 150,000

Checks: #452 $333, #453 $865, #456 $16,370, #457 $97,525 (115,093)

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

Ending bank balance $ 64,594

16. AJE: The income tax rate is 30%. This amount will be paid when the tax return is due in April. Hint: Prepare the income statement up to income before taxes and multiply by 30% to compute the amount.

Using your unadjusted trial balance above and the data for adjusting entries, prepare a 10 column worksheet. Prepare a bank reconciliation in good form. Use your own paper. Record the necessary AJE. Journalize and post all other adjusting entries. Prepare an income statement and a retained earnings statement for the quarter ended 3/31/16 and a classified balance sheet at 3/31/16.