Selected transactions completed by Kornett Company during its first fiscal year ended December 31, 20Y8, 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, n/30. The perpetual inventory system is used to account for inventory.
May	13	Paid the invoice of April 14.
	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:
Federal 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	0.6%
Amount subject to unemployment taxes:
State unemployment	$5,000
Federal unemployment	5,000

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, 20Y8 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).

a.

The physical inventory on December 31 indicated an inventory shrinkage of $3,300.

b.

Prepaid insurance expired during the year, $22,820.

c.

Office supplies used during the year, $3,920.

d.

Depreciation is computed as follows:

		Residual	Acquisition	Useful Life
Asset	Cost	Value	Date	in Years	Depreciation Method Used
Buildings	$900,000	$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

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 eight 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.

Vacation pay expense for December, $10,500.

i.

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.

j.

Interest was accrued on the note receivable received on October 17. Assume a 360-day year.

*Refer to the chart of accounts for the exact wording of the account titles. CNOW journals do not use lines for journal explanations. Every line on a journal page is used for debit or credit entries. CNOW journals will automatically indent a credit entry when a credit amount is entered.