NAME:

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 SAINT LOUIS UNIVERSITY
SCHOOL OF ENGINEERING AND ARCHITECTURE
INDUSTRIAL ENGINEERING DEPARTMENT
COMPREHENSIVE PROBLEM

GENERAL INSTRUCTIONS:
Go over the given Case for Kornett Company and answer the questions/instructions that follow.
Refer to the Chart of Accounts for the account titles used by Kornett Company.
Checking also involves how you utilize the functions of excel applicable to this case.

Enter assets in the order in which they appear in the post-closing trial balance. Refer to the
information given in the problem and the Chart of Accounts

claimer: Reproduction, storing in a retrieval system, distributing, uploading or posting online, or transmitting in any form or
any means, electronic, mechanical, photocopying, recording, taking screenshots or otherwise of any part of this workbook
d its worksheet contents, without the prior written permission of SLU, is strictly prohibited.
smitting in any form or
part of this workbook
 ASSETS LIABILITIES
110 Petty Cash 211
111 Cash 212
112 Notes Receivable 213
113 Accounts Receivable 214
114 Allowance for Doubtful Accounts 215
115 Merchandise Inventory 216
121 Interest Receivable 221
122 Prepaid Insurance 222
123 Office Supplies 223
130 Land 231
131 Buildings 232
132 Accumulated Depreciation - Buildings 241
133 Office Equipment
134 Accumulated Depreciation - Office Equipment
135 Store Equipment
136 Accumulated Depreciation - Store Equipment
137 Mineral Rights
138 Accumulated Depletion - Mineral Rights
141 Patents
 KORNETT COMPANY
Chart of Accounts

LIABILITIES EQUITY REV

Social Security Tax Payable 310 J. Kornett, Capital 410
Medicare Tax Payable 311 J. Kornett, Drawing 610
Employees Federal Income Tax Payable 611
State Unemployment Tax Payable
Federal Unemployment Tax Payable
Salaries Payable
Accounts Payable
Interest Payable
Product Warranty Payable
Vacation Pay Payable
Unfunded Pension Liability
Notes Payable
 REVENUE EXPENSES
Sales 510
Interest Revenue 521
Gain on Sale of Office Equipment 522
523
524
525
529
551
552
553
553
555
561
571
572
573
574
575
581
582
710
711
 EXPENSES
Cost of Merchandise Sold
Repairs Expense
Rent Expense
Insurance Expense
Bad Debts Expense
Office Supplies Expense
Cash Short or Over
Sales Salaries Expense
Office Salaries Expense
Payroll tax Expense
Vacation Pay Expense
Pension Expense
Product Warranty Expense
Depreciation Expense - Buildings
Depreciation Expense - Office Equipment
Depreciation Expense - Store Equipment
Depletion Expense - Mineral Rights
Amortization Expense - Patents
Miscellaneous Selling Expense
Miscellaneous Administrative Expense
Interest Expense
Loss on Sale of Office Equipment
 KORNETT COMPANY
Bank Reconciliation
December 31, 2018

Cash balance according to bank statement

Deposit in transit, not recorded by bank
Outstanding checks
Adjusted balance

Cash balance according to company's records

Bank service charges $ 750.00
Error in recording check $ 700.00
Adjusted balance
$ 283,000.00
$ 29,500.00
$ 68,540.00
$ 243,960.00

$ 260,475.00

$ 1,450.00
$ 259,025.00
Several transactions completed by Kornett Company for its first fiscal year ended December 31, 2018, were as
Journalize the selected transactions. Assume the fiscal year of 360 days. If no entry is required, select "

Date Transaction
Jan 3 Issued a check to establish a petty cash fund, $4,500.
Feb 26 Replenished the petty cash fund, based on the following summary of petty cash receipts: office su
Apr 14 Purchased $31,300 of merchandise on account, terms, n/30. The perpetual inventory system is us
May 13 Paid the invoice of April 14.
May 17 Received cash from daily cash sales for $21,200. The amount indicated by the cash register was $
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.
Aug 24 Received $7,600 on the Finley account and wrote off the remainder owed on a $9,000 accounts r
Sept 15 Reinstated the Finley account written off on August 24 and received $1,400 cash in full payment
Sept 15 Purchased land by issuing a $670,000, 90-day note to Zahorik Co., which discounted it at 9%. As
Oct 17 Sold office equipment in exchange for $135,000 cash plus receipt of a $100,000, 90-day, 9% not
Nov 30 Journalized the monthly payroll for November, based on the following data:
Salaries: Deductions:
Sales salaries $ 135,000 Federal income tax withheld
Office Salaries $ 77,250 Social security tax wittheld
$ 212,250 Medicare tax withheld

Nov 30 Journalized the employer’s payroll taxes on the payroll.

Dec 14 Journalized the payment of the September 15 note at maturity.
Dec 31 The pension cost for the year was $190,400, of which $139,700 was paid to the pension plan trus

Required:
1. Journalize the enumerated transactions on the Journal Entries Sheet.
2. Based on the following selected data, journalize the adjusting entries as of December 31, 2018 on the Adjust
a. Estimated uncollectible accounts at December 31, $16,000. The balance of Allowance for Doubtful ac
b. The physical inventory on December 31 indicated an inventory shrinkage of $3,300.
c. Prepaid Insurance expired during the year, $22,820.
d. Office supplies used during the year, $3,920.
e. Depreciation is computed as follws:
Acquisition
Asset Cost Residual Value
Date
Buildings $ 900,000 $ - 2-Jan
Office Equipment $ 246,000 $ 26,000 3-Jan
Store Equipment $ 112,000 $ 12,000 1-Jul

f. A patent costing $48,000 when acquired on Jnauary 2 has a remaining legal life of 10years and is expe
g. The cost of mineral rights was $546,000. Of the estimated deposit of 910,000 tons of ore, 75,000 tons
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
j. Interest was accrued on the note receivable received on October 17. Assume a 360-day year.
3. Complete the Post-Closing Trial Balance.
3. Based on the following information and the post-closing trial balance, prepare a balance sheet in report form
The merchandise inventory is stated at cost by the LIFO Method.
The product warranty payable is a current liability.
Vacation pay payable:
Current liability $ 7,140
Long-term liability $ 3,360
The unfunded pension liability is a long-term liability.
Notes payable:
Current liability $ 70,000
Long-term liability $ 630,000

Enter assets in the order in which they appear in the post-closing trial balance. Refer to the information given in
ded December 31, 2018, were as follows.
entry is required, select "No Entry" from the dropdown and leave the amount boxes blank. Ifan amount box does not require an e

ry of petty cash receipts: office supplies, $1,680; miscellaneous selling expense, $570; miscellaneous administrative expense, $8
perpetual inventory system is used to account for inventory.

dicated by the cash register was $21,240.

ity date. Assume a 360-day year.

der owed on a $9,000 accounts receivable balance. (The allowance method is used in accounting for uncollectible receivables.)
ived $1,400 cash in full payment. (Record as two entries.)
o., which discounted it at 9%. Assume a 360-day year.
pt of a $100,000, 90-day, 9% note. The equipment had a cost of $320,000 and accumulated depreciation of $64,000 as of Octobe
owing data:
uctions: Unemployment Tax Rates:
$ 39,266.00 State unemployment 5.40%
$ 12,735.00 Federal unemployment 0.60%
$ 3,184.00 Amount subject to unemployment taxes:
$ 55,185.00 State unemployment $ 5,000.00
Federal unemployment $ 5,000.00

was paid to the pension plan trustee.

December 31, 2018 on the Adjusting Entries Sheet.

ce of Allowance for Doubtful accounts at December 31was $2,000 (debit)
kage of $3,300.

Useful Life in
Depreciation Method Used
Years
50 Double-declining balance
5 Straight-line
10 Straight-line

legal life of 10years and is expected to have value for eight years.
910,000 tons of ore, 75,000 tons were mined and sold during the year.
a one-year period. The estimated cost is 4% of sales, which totaled $1,900,000 in December.
ssume a 360-day year.

are a balance sheet in report form at December 31 of the current year.

Refer to the information given in the problem and the Chart of Accounts
ount box does not require an entry, leave it blank.

us administrative expense, $880.

or uncollectible receivables.)

ation of $64,000 as of October 17.

Indicate the date for every transaction.

DATE JOURNAL ENTRIES

Jan 3 Petty Cash
Cash
Feb 26 Office Supplies
Miscellaneous Selling Expense
Miscellaneous Administrative Expense
Cash
Apr 14 Merchandise Inventory
Accounts Payable
May 13 Accounts Payable
Cash
May 17 Cash
Cash Short or Over
Sales
Jun 2 Notes Receivable
Accounts Receivable
Aug 1 Cash
Notes Receivable
Interest Revenue
Aug 24 Cash
Allowance for doubtful accounts
Accounts Receivable
Sept 15 Accounts Receivable
Allowance for Doubtful Accounts
Cash
Accounts Receivable
Sept 15 Land
Discount of Notes Payable
Notes Payable
Oct 17 Cash
Notes Receivable
Accumulated Depreciation
 Loss on Sale of Fixed Assets
Office Equipment
Nov 30 Sales Salaries Expense
Office Salaries Expense
Social Security Tax Payable
Medicare Tax Payable
Employees Federal Income Tax Payable
Salaries Payable

Unfunded Pension Liability

Dec 31 Miscellaneous Expense
Accounts Payable
Cash
 DEBIT CREDIT
$ 4,500.00
$ 4,500.00
$ 1,680.00
$ 570.00
$ 880.00
$ 3,130.00
$ 31,300.00
$ 31,300.00
$ 31,300.00
$ 31,300.00
$ 21,200.00
$ 40.00
$ 21,240.00
$ 180,000.00
$ 180,000.00
$ 182,400.00
$ 180,000.00
$ 2,400.00
$ 7,600.00
$ 1,400.00
$ 9,000.00
$ 1,400.00
$ 1,400.00
$ 1,400.00
$ 1,400.00
$ 654,925.00
$ 15,075.00
$ 670,000.00
$ 135,000.00
$ 100,000.00
$ 64,000.00
$ 21,000.00
$ 320,000.00
$ 135,000.00
$ 77,250.00
$ 12,735.00
$ 3,184.00
$ 39,266.00
$ 157,065.00

$ 750.00
$ 700.00
$ 1,450.00
 ADJUSTING JOURNAL ENTRIES DEBIT
a.

b.

c.

d.

e.

f.

g.

h.

i.

j.
CREDIT
 KORNETT COMPANY
Post-Closing Trial Balance
December 31, 2018
Account Title Debit
Petty Cash
Cash
Notes Receivable $ 100,000.00
Accounts Receivable $ 470,000.00
Allowance for Doubtful Accounts
Merchandise Inventory $ 320,000.00
Interest Receivable
Prepaid Insurance $ 45,640.00
Office Supplies $ 13,390.00
Land
Buildings $ 900,000.00
Accumulated Depreciation - Buildings
Office Equipment $ 246,000.00
Accumulated Depreciation - Office Equipment
Store Equipment $ 112,000.00
Accumulated Depreciation - Store Equipment
Mineral Rights $ 546,000.00
Accumulated Depletion - Mineral Rights
Patents
Social Security Tax Payable
Medicare Tax Payable
Employees Federal Income Tax Payable
State Unemployment Tax Payable
Federal Unemployment Tax Payable
Salaries Payable
Accounts Payable
Interest Payable
Product Warranty Payable
Vacation Pay Payable
Unfunded Pension Liability
Notes Payable
J. Kornett, Capital
TOTALS
 Credit

$ 25,470.00
$ 4,710.00
$ 40,000.00

$ 131,600.00
$ 28,000.00

$ 10,500.00
$ 50,700.00
$ 700,000.00
$ 2,345,010.00
Select the account titles from the drop down list.

KORNETT COMPANY
Balance Sheet
December 31, 2018

ASSETS
Current Assets:

Property, plant, and equipment:

Intangible Assets:

Total Assets

LIABILITIES
Current Liabilities:
 Total current liabilities
Long-Term Liabilities:

Total long-term liabilities

Total Liabilities

OWNER'S EQUITY

Total Liabilities and Owner's Equity

OMPANY
heet
, 2018