a. Salaries accrued: sales salaries, $4,275; officers salaries, $2,175; office s

Question

a. Salaries accrued: sales salaries, $4,275; officers salaries, $2,175; office salaries, $825. The payroll taxes are immaterial and are not accrued b. Vacation pay, $13,350. nsive Problem 3 Selected transactions completed by Kornett Company during its first fiscal year ended De cember 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; miscella- neous 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 June 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 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 ac- counting for uncollectible receivables.) in full payment. discounted it at 9%. 90-day, 9% note. The equipment had a cost of $320,000 and accumulated Sept.15. Reinstated the Finley account written off on August 24 and received $1,400 cash 15. Purchased land by issuing a $670,000, 90-day note to Zahorik Co., which 35,000 cash plus receipt of a $100,000, Oct. 17. Sold office equipment in exchange for $1 depreciation of $64,000 as of October 17 (Continued)

Explanation / Answer

The journal entries for the transactions made during the year are as under: Jan. 3    Petty Cash $       4,500 Bank $        4,500 (being check issued for petty cash) Feb. 26 Office supplies $       1,680                  Misc. selling expenses $          570                 Misc. administrative exp. $          880 Petty cash $        3,130 (Being expenses recorded) Apr.14 Merchandise Inventory $    31,300 Accounts Payable $     31,300 (Being inventory purchased on account) May 13 Accounts payable $    31,300 Cash $     31,300 (being cash paid for invoice) May 17 Sales $ 40 Cash $ 40 (Being correct entry passed for wrongly entered in cash register) June 2 8% Notes Receivable $ 180,000 Accounts payable $   180,000 (Being notes issued by Ryanair account) 1st Aug. Cash $ 182,400 8% Notes Receivable $   180,000 Interest on note $        2,400 (Being cash received from notes with interest) Aug. 24 Cash $       7,600    Uncollectible receivable $       1,400 Accounts receivable $        9,000 (Being cash received from Fenley account and remaining written off) Set.15 Cash $       1,400 Uncollectible receivable $        1,400 (Being cash received from uncollectible receivable) Sept. 15 Land Account $ 670,000 9% Notes payable $   670,000 (Being land purchased and notes issued) Oct.17 Cash $ 135,000 Notes receivable $ 100,000 Accumulated depreciation $    64,000           Loss on sale of equipment $    21,000 Office equipment $   320,000 (Being office equipment sold) Nov. 30 Sales salaries $ 135,000 Office salaries $    77,250 Income tax withheld $     39,266 Social security tax withheld $     12,735 Medicare Tax Withheld $        3,184 SUTA $        2,970 FUTA $ 40 Salaries payable $   154,055 (Being salaries and tax expenses recorded) Nov. 30 Tax expense Account $    58,195 Income tax payable $     39,266 Social security tax payable $     12,735 Medicare tax payable $        3,184 SUTA payable $        2,970 FUTA payable $              40 (Being tax expenses recorded for the year) 14th Dec. 9% Notes payable $ 670,000 Interest on notes $    15,075 Cash $   685,075 (Being paid for notes payable at maturity) 31st Dec. Pension expense $ 190,400 Cash $   139,700 Unfunded pension liability $     50,700 (being pension expenses recorded for the year) The journal entry for bank reconciliation is as under: Service charges $          750 Bank $           750 (Being service charges recorded) Bank $          700 Accounts Receivable $           700 (Being amount correctly recorded)

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