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Selected Transactions Completed by Kornett Company During Its First Fiscal
Selected Transactions Completed by Kornett Company During Its First Fiscal
Selected transactions completed by Kornett Company during its first fiscal year ended
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.
17. Received cash from daily cash sales for $21,200. The amount indicated by the cash register
was $21,240.
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:
31. The pension cost for the year was $190,400, of which $139,700 was paid to the pension
plan trustee.
Instructions
2. Based on the following data, prepare a bank reconciliation for December of the current year:
f. 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.
4. Based on the following selected data, journalize the adjusting entries as of December 31 of
the current year:
f. A patent costing $48,000 when acquired on January 2 has a remaining legal life of
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.
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.
5. Based on the following information and the post-closing trial balance that follows, prepare a
balance sheet in report form at December 31 of the current year:
Notes payable:
Kornett Company