Selected transactions comp... Comprehensive Problem 3 Selected transactions completed by Kornett Company during its first fiscal year ended December 31, 2016, 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. Apr. 14 Purchased $31,300 of merchandise on account, terms 1/10, n/30. The perpetual inventory system is used to account for inventory. May 13 Paid the invoice of April 14 after the discount period had passed. 17 Received cash from daily cash sales for $21,200. The amount indicated by the cash register was $21,240. Jun. 2 Received a 60-day, 8% note for $180,000 on the Ryanair account. Aug. 1 Received amount owed on June 2 note, plus interest at the maturity date. Assume a 360-day year. 24 Received $7,600 on the Finley account and wrote off the remainder owed on a $9,000 accounts receivable balance. (The allowance method is used in accounting for uncollectible receivables.) Sep. 15 Reinstated the Finley account written off on August 24 and received $1,400 cash in full payment. (Record as two entries.) Record the following on journal page 22. Sep. 15 Purchased land by issuing a $670,000, 90-day note to Zahorik Co., which discounted it at 9%. Assume a 360-day year. Oct. 17 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 depreciation of $64,000 as of October 17. Nov. 30 Journalized the monthly payroll for November, based on the following data: Salaries: Sales salaries $135,000 Office salaries 77,250 $212,250 Deductions: Income tax withheld $39,266 Social security tax withheld 12,735 Medicare tax withheld 3,184 Unemployment Tax rates: State unemployment 5.4% Federal unemployment 0.8% Amount subject to unemployment taxes: State unemployment $5,000 Federal unemployment 5,000 30 Journalized the employers 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. Required: 1. Journalize the selected transactions, starting on page 21 of the journal.* 2. Based on the following data, prepare a bank reconciliation for December 2016. Refer to the Labels and Amount Descriptions list for exact wording of text entries. Enter all amounts as positive numbers. 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 on page 23 of the journal. Kornett Company uses the Miscellaneous Administrative Expense account for bank service charges. 4. Based on the following selected data, journalize the adjusting entries as of December 31, 2016 on page 23 of the journal: 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). The physical inventory on December 31 indicated an inventory shrinkage of $3,300. Prepaid insurance expired during the year, $22,820. Office supplies used during the year, $3,920. Depreciation is computed as follows: Residual Acquisition Useful Life Asset Cost Value Date in Years Depreciation Method Used Buildings $900,00 $0 January 2 50 Double-declining-balance Office Equip. 246,000 26,000 January 3 5 Straight-line Store Equip. 112,000 12,000 July 1 10 Straight-line 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 eight years. 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. Vacation 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. Interest was accrued on the note receivable received on October 17. Assume a 360-day year. * Refer to the Chart of Accounts for exact wording of account titles. 5. Based on the following information and the post-closing trial balance that follows, prepare a balance sheet in report form at December 31, 2016. Be sure to complete the heading of the balance sheet. Enter assets in the order in which they appear in the post-closing trial balance. Refer to information given in the problem and the Labels and Amount Descriptions list for exact wording of text entries. There is no need to include (current portion) or a due date with any account titles. The word Less and colons will appear automatically. Enter all amounts as positive numbers. The merchandise inventory is stated at cost by the LIFO method. The product warranty payable is a current liability. Vacation pay payable: Current liability: $7,140 Long-term liability: 3,360 The unfunded pension liability is a long-term liability. Notes payable: Current liability: $70,000 Long-term liability: 630,000 Kornett Company POST-CLOSING TRIAL BALANCE December 31, 2016 ACCOUNT TITLE DEBIT CREDIT 1 Petty Cash 4,500.00 2 Cash 243,960.00 3 Notes Receivable 100,000.00 4 Accounts Receivable 470,000.00 5 Allowance for Doubtful Accounts 16,000.00 6 Merchandise Inventory 320,000.00 7 Interest Receivable 1,875.00 8 Prepaid Insurance 45,640.00 9 Office Supplies 13,400.00 10 Land 654,925.00 11 Buildings 900,000.00 12 Accumulated Depreciation-Buildings 36,000.00 13 Office Equipment 246,000.00 14 Accumulated Depreciation-Office Equipment 44,000.00 15 Store Equipment 112,000.00 16 Accumulated Depreciation-Store Equipment 5,000.00 17 Mineral Rights 546,000.00 18 Accumulated Depletion 30,000.00 19 Patents 42,000.00 20 Social Security Tax Payable 25,470.00 21 Medicare Tax Payable 4,710.00 22 Employees Federal Income Tax Payable 40,000.00 23 State Unemployment Tax Payable 270.00 24 Federal Unemployment Tax Payable 40.00 25 Salaries Payable 157,000.00 26 Accounts Payable 131,600.00 27 Interest Payable 28,000.00 28 Product Warranty Payable 76,000.00 29 Vacation Pay Payable 10,500.00 30 Unfunded Pension Liability 50,700.00 31 Notes Payable 700,000.00 32 J. Kornett, Capital 2,345,010.00 33 Totals 3,700,300.00 3,700,300.00 CHART OF ACCOUNTS Kornett Company General Ledger ASSETS 110 Petty Cash 111 Cash 112 Notes Receivable 113 Accounts Receivable 114 Allowance for Doubtful Accounts 115 Merchandise Inventory 121 Interest Receivable 122 Prepaid Insurance 123 Office Supplies 130 Land 131 Buildings 132 Accumulated Depreciation-Buildings 133 Office Equipment 134 Accumulated Depreciation-Office Equipment 135 Store Equipment 136 Accumulated Depreciation-Store Equipment 137 Mineral Rights 138 Accumulated Depletion 141 Patents LIABILITIES 211 Social Security Tax Payable 212 Medicare Tax Payable 213 Employees Federal Income Tax Payable 214 State Unemployment Tax Payable 215 Federal Unemployment Tax Payable 216 Salaries Payable 221 Accounts Payable 222 Interest Payable 223 Product Warranty Payable 231 Vacation Pay Payable 232 Unfunded Pension Liability 241 Notes Payable EQUITY 310 J. Kornett, Capital 311 J. Kornett, Drawing 312 Income Summary REVENUE 410 Sales 610 Interest Revenue 611 Gain on Sale of Office Equipment EXPENSES 510 Cost of Merchandise Sold 521 Repairs Expense 522 Rent Expense 523 Insurance Expense 524 Bad Debt Expense 525 Office Supplies Expense 529 Cash Short and Over 551 Sales Salaries Expense 552 Office Salaries Expense 553 Payroll Tax Expense 554 Vacation Pay Expense 555 Pension Expense 561 Product Warranty Expense 571 Depreciation Expense-Buildings 572 Depreciation Expense-Office Equipment 573 Depreciation Expense-Store Equipment 574 Depletion Expense 575 Amortization Expense-Patents 581 Miscellaneous Selling Expense 582 Miscellaneous Administrative Expense 710 Interest Expense 711 Loss on Sale of Office Equipment Amount Descriptions (Bank Reconciliation) Adjusted balance Bank service charges Deposit in transit, not recorded by bank Error in recording check NSF check Outstanding checks Labels (Balance Sheet) Current assets Current liabilities December 31, 2016 For the Year Ended December 31, 2016 Intangible assets Long-term liabilities Property, plant, and equipment Amount Descriptions (Balance Sheet) Net cash flows from financing activities Net cash flows from investing activities Net cash flows from operating activities Net increase (decrease) in cash Total assets Total current assets Total current liabilities Total liabilities Total long-term liabilities Total liabilities and owners equity Total property, plant, and equipment 4. Based on the selected data, journalize the adjusting entries as of December 31, 2016 on page 23 of the journal.* * Refer to the Chart of Accounts for exact wording of account titles. JOURNAL DATE DESCRIPTION POST. REF. DEBIT CREDIT 1 2 3 4 Adjusting Entries 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 Expert Answer Anonymous Anonymous answered this Was this answer helpful? 0 0 1,355 answers Required: 1. Journalize the selected transactions, starting on page 21 of the journal.* Kornett Company JOURNAL Page # 21 Date Account Debit Credit Jan. 3 Pety Cash 4500 Cash 4500 Feb. 26 Office Supplies 1680 Misc. Selling Expense 570 Misc. Administrative Expense 880 Cash 3130 Apr. 14 Inventory 31300 Account Payable 31300 May. 13 Accounts Payable 31300 Cash 31300 May. 17 Cash 21200 Cash - Short & Over 40 Sales 21240 Jun. 2 Note Receivable 180000 Accounts Receivable 180000 Aug. 1 Cash 182400 Note receivable 180000 Interest revenue 2400 Aug. 24 Cash 7600 Bad debts Expense 1400 Accounts Receivable 9000 Sept. 15 Accounts Receivable 1400 Bad debts expense 1400 Cash 1400 Accounts Receivable 1400 JOURNAL Page # 22 Date Account Debit Credit Sept. 15 Land 670000 Note Payable 670000 Oct. 17 Cash 135000 Note receivable 100000 Accumulated Depreciation 64000 Loss on sale of equipment 21000 Equipment 320000 Nov. 30 Sales salaries 135000 Office Salaries 77250 Income tax withholding payable 39266 FICA - employee payable 12735 FICA - Medicare employee payable 3184 Salary Payable 157065 Nov. 30 Payroll taxes 25919 FICA - employer payable 12735 FICA - Medicare employer payable 3184 SUTA tax payable 5000 FUTA tax payable 5000 Dec. 14 Note payable 670000 Cash 670000 Dec. 31 Pension expense 190400 Pension liabilty 50700 Cash 139700 2. Based on the following data, prepare a bank reconciliation for December 2016. Refer to the Labels and Amount Descriptions list for exact wording of text entries. Enter all amounts as positive numbers. Bank Reconciliation Statement As on December 31, 2016 Balance as per Bank Statement 283000 Add: Deposits in transit 29500 312500 Less: Check Outstanding 68540 243960 Balance as per Ledger 245410 Less: Bank Service charges 750 Mistake in recording check 700 Adjusted Ledger Balance 243960 3. Based on the bank reconciliation prepared in (2), journalize the entry or entries to be made by Kornett Company on page 23 of the journal. Kornett Company uses the Miscellaneous Administrative Expense account for bank service charges. JOURNAL Page # 23 Date Account Debit Credit Dec. 31 Miscellaneous Administrative Expense 750 Accounts Payable 700 Cash 1450 Note: Please submit a new question for remaining parts.