Selected transactions completed by Kornett Company during its first fiscal year

Question

Selected transactions completed by Kornett Company during its first fiscal year ended December 31, 20Y5, were as follows:

Journalized the monthly payroll for November, based on the following data:

Instructions

1. Journalize the selected transactions.

2. Based on the following data, prepare a bank reconciliation for December of the current year:

- 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. Use the Miscellaneous Administrative Expense account to record bank service charges.

Selected transactions completed by Kornett Company during its first fiscal year ended December 31, 20Y5, 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. 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 accounting for uncollectible receivables.) Sept. 15. Reinstated the Finley account written off on August 24 and received $1,400 cash in full payment. 15. Purchased land by issuing a $670,000, 90-day note to Zahorik Co., which discounted it at 9%. 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:

30. Journalized the employer's 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.

Instructions

1. Journalize the selected transactions.

2. Based on the following data, prepare a bank reconciliation for December of the current year:

- 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.

Explanation / Answer

Part 1)

The journal entries are provided as below:

_____

Part 2)

The bank reconciliation statement is prepared as follows:

_____

Part 3)

The journal entries are given as below:

Date Account Titles Debit Credit Jan.3 Petty Cash $4,500 Cash $4,500 Feb. 26 Office Supplies $1,680 Miscellaneous Selling Expense $570 Miscellaneous Administrative Expense $880 Cash $3,130 Apr. 14 Merchandise Inventory $31,300 Accounts Payable $31,300 May.13 Accounts Payable $31,300 Cash $31,300 May.17 Cash $21,200 Cash Short and Over (21,240 - 21,200) $40 Sales $21,240 Jun. 2 Notes Receivable $180,000 Accounts Receivable-Ryanair $180,000 Aug. 1 Cash (180,000 + 2,400) $182,400 Notes Receivable $180,000 Interest Revenue (180,000*8%*60/360) $2,400 Aug. 24 Cash $7,600 Allowance for Doubtful Debts $1,400 Accounts Receivable-Finley $9,000 Sep. 15 Accounts Receivable-Finley $1,400 Allowance for Doubtful Debts $1,400 Sep. 15 Cash $1,400 Accounts Receivable-Finley $1,400 Sep. 15 Land $654,925 Interest Expense $15,075 Notes Payable $670,000 Oct. 17 Cash $135,000 Notes Receivable $100,000 Accumulated Depreciation-Office Equipment $64,000 Loss on Sale of Office Equipment $21,000 Office Equipment $320,000 Nov. 30 Sales Salaries Expense $135,000 Office Salaries Expense $77,250 Employees Income Tax Payable $39,266 Social Security Tax Payable $12,735 Medicare Tax Payable $3,184 Salaries Payable $157,065 Nov. 30 Payroll Tax Expense $16,229 Social Security Tax Payable $12,735 Medicare Tax Payable $3,184 State Unemployment Tax Payable(5,000*5.4%) $270 Federal Unemployment Tax Payable (5,000*.8%) $40 Dec. 14 Notes Payable $670,000 Cash $670,000 Dec. 31 Pension Expense $190,400 Cash $139,700 Unfunded Pension Liability (190,400 - 139,700) $50,700

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