Selected transactions completed by Gampfer Company during its first fiscal year ending December 31 were as follows:

Jan. 2 Issued a check to establish a petty cash fund $3,200.

Mar. 14 Replenished the petty cash fund, based on the following summary of petty cash receipts: office supplies, $1,200; miscellaneous selling expense, $410; miscellaneous administrative expense, $620.

Apr. 21 Purchased $22,400 of merchandise on account, terms 1/10, n/30. The perpetual inventory system is used to account for inventory.

May 20. Paid the invoice of April 21 after the discount period had passed.

May 23. Recieved cash from daily cash sales for $15,120. The amount indicated by the cash register was $15,152.

June 15. Recieved a 60-day, 10% note for $127,500 on the Cady account.

Aug 14. Recieved amount owed on June 15 note, plus interest at the maturity date.

Aug 18. Recieved $5,440 on the Yoder account and wrote off the remainder owed on a $6,4000 accounts recievable balance. (The allowance method is used in accounting for uncollectible recievables.)

Sept. 9. Reinstated the yoder account written off on August 18 and recieved $960 cash in full payment.

Sept. 15. Purchased land by issuing a $480,000 90 day note to Ace Development Co. which discounted it at 8%.

Oct. 17 Sold office equipment in exchange for $96,000 cash plus reciept of a $64,000, 90-day 6% note. The equipment had a cost of $224,000 and accumulated depreciation of $44,800 as of October 17.

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

............... Salaries....................... Deductions .

Sales Salaries $96,640 .......... Income tax withheld $28,090

Office Salaries $55,200 ............ Social Security tax withheld $9,110

................... $151,840 ........... Medicare tax withheld $2,278

Unemployment tax rates:

State unemployment: 4.0%

Federal unemployment: 0.8%

Amount subject to unemployment taxes:

State unemployment: $5,000

Federal unemployment: $5,000

Nov. 30 Journalized the employers payroll taxes on the payroll

Dec. 14 Journalized the payment of the September 15 note at maturity

Dec. 31 The pension cost for the year was $136,000, of which $99,840 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, $202,240,

b.) Balance according to the ledger at December 31, $175,440.

c.) Checks outstanding at December 31, $48,960.

d.) Deposit in transit, not recorded by bank, $21,120.

e.) Bank debit memo for service charges, $540.

f.) Check for $11,520 in payment of an invoice was incorrectly recorded in the accounts as $11,020.

3.) Based on bank reconciliation prepared in (2), journalize the entry or entries to be made by Gampfer Company.

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, $11,520, based on an aging of accounts receivable. The balance of Allowance for doubtful accounts at December 31 was $1,200 (debit).

b.) the physical inventory on December 31 indicated an inventory shrinkage of $2,360.

c.) prepaid insurance expired during the year, $16, 300.

d.) office supplies used during the year, $2,800.

e.) Depreciation is computed as follows.

Asset Cost Residual Value Acquisition Date Useful life (Years) Depreciation Method

Buildings $650,000 $0 January 2 50 Double declining balance

Office Equip. $176,000 $16,000 January 3 5 Straight-Line

Store Equip. $80,000 $8,000 July 1 10 Straight-Line

F.) A patent costing 36,000 when acquired on January 2 has a remaining legal life of eight years and is expected to have value for six years.

G.) The cost of mineral rights was $390,000. Of the estimated deposit of 650,000 tons of ore, 38,400 tons were mined and sold during the year.

H.) Vacation pay expense for December, $7,500.

I.) A product warranty was granted beginning December 1 and covering a one year period. The estimated cost is a 3% of sales, which totaled $1,350,000 in December.

J.) Interest was accrued on the note receivable received on October 17.

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.

The merchandise inventory is stated at cost by the LIFO method.

The product warranty payable is a current liability.

Vacation pay payable:

Current liability $5,100

Long-term liability $2,400

The unfunded pension liability is a long-term liability.

Notes payable:

Current Liability $50,000

Long-term liability $450,000

Gampfer Company

Post-Closing Trial Balance

December 31,2012

..........................................................................Debit Balances ............ Credit Balances

Petty Cash $3,200

Cash. $174,400

Notes Receivable.. $64,000

Accounts Receivable $336,000

Allowance for Doubtful Accounts........................................... $11,520

Merchandise Inventory. $ 230,000

Interest Receivable... $ 800

Prepaid Insurance. $ 32,600

Office Supplies.. $ 9,600

Land $ 470,400

Buildings $ 650,000

Accumulated Depreciation-Buildings ..........................................$26,000

Office Equipment.. $176,000

Accumulated Depreciation-Office Equipment ........................................$32,000

Sore Equipment.. $ 80,000

Accumulated Depreciation- Store Equipment .........................................$ 3,600

Mineral Rights. $390,000

Accumulated Depletion............................................ $23,040

Patents $ 30,000

Social Security Tax Payable ...........................................$13,513

Medicare Tax Payable.. ............................................$ 3,378

Employees Federal Income Tax Payable. .............................................$28,090

State Unemployment Tax Payable.... .............................................$ 40

Federal Unemployment Tax Payable .............................................$ 200

Salaries Payable................................................ $112,612

Accounts Payable.............................................. $224,000

Interest Payable............................................. $ 20,207

Product Warranty Payable............................................... $ 40,500

Vacation Pay Payable.............................................. $ 7,500

Unfunded Pension Liability.............................................. $ 36,160

Notes Payable.............................................. $500,000

J. Gampfer, Capital........................................... $1,564,640

..............................................................................$2,550,840.................$2,550,840