Selected transactions completed by Kornett Company during its first fiscal year ended December 31, 2016, were as follows:
| 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: 
A.) 
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| 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 | Common Stock | | 311 | Retained Earnings | | 312 | Dividends | | 313 | Income Summary | | 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 B.) | 1. | Journalize the selected transactions, starting on page 21 of the journal.* Scroll down for pages 22 and 23 of the journal. | | 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 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. | | ** | For grading purposes, use one compound depreciation entry rather than three simple entries with separate dates. | 
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Bank Reconciliation 2. Prepare a bank reconciliation for December 2016. Refer to the lists of Labels and Amount Descriptions for the exact wording of the answer choices for text entries 
Balance Sheet 5. Based on the following information and the post-closing trial balance on the Instructions panel, 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. 
| | | 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 | |
Jan. Feb. 3 26 Issued a check to establish a petty cash fund of $4,500. 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, 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. Received amount owed on June 2 note, plus interest at the maturity date. Assume a 360-day year. 1 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 Oct. 17 Purchased land by issuing a $670,000, 90-day note to Zahorik Co., which discounted it at 9%. Assume a 360-day year. 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. Journalized the monthly payroll for November, based on the following data: Nov. 30 Jan. Feb. 3 26 Issued a check to establish a petty cash fund of $4,500. 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, 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. Received amount owed on June 2 note, plus interest at the maturity date. Assume a 360-day year. 1 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 Oct. 17 Purchased land by issuing a $670,000, 90-day note to Zahorik Co., which discounted it at 9%. Assume a 360-day year. 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. Journalized the monthly payroll for November, based on the following data: Nov. 30
