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Selected Transactions Completed by Kornett Company During Its First Fiscal

Kornett Company completed various transactions during its first fiscal year ended December 31, 20Y8, including establishing a petty cash fund, purchasing and paying for inventory, receiving and paying notes receivable, writing off and reinstating accounts receivable, purchasing land by issuing a note, selling equipment for cash and a note, and paying various payroll taxes and pension costs.

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30 views

Selected Transactions Completed by Kornett Company During Its First Fiscal

Kornett Company completed various transactions during its first fiscal year ended December 31, 20Y8, including establishing a petty cash fund, purchasing and paying for inventory, receiving and paying notes receivable, writing off and reinstating accounts receivable, purchasing land by issuing a note, selling equipment for cash and a note, and paying various payroll taxes and pension costs.

Uploaded by

trilocksp Singh
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
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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
December 31, 20Y8, 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, 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.
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:

Unemployment tax rates:


State unemployment ................................................... 5.4%
Federal unemployment ................................................ 0.6%
Amount subject to unemployment taxes:
State unemployment .......................................... $5,000
Federal unemployment ......................................... 5,000
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:
a. Balance according to the bank statement at December 31, $283,000.

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