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a. Salaries accrued: sales The payroll taxes are immaterial and are not acu b. Vacation pay, $13,350. salaries, $4,275; officers salaries, $2,17% office salaries, sas. rehensive Problem 3 Selected transactions completed by Kornet t Company during its first fiscal year ended De- cember 31, 2016, were as follows: Jan. 3. Issued a check to establish a pety 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, neous administrative expense, $880. $570, miscella- Apr. 14. Purchased $31,300 of merchandise on account, terms 1/10, n/30. The pe rpetual 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. 2. Received a 60-day, 8% note for $180,000 on the Ryanair account. 1. Received amount owed on June 2 note, plus interest at the maturity date. June Aug. 24. Received $7,600 on the Finley account and wrote off the remainder owed on a $9,000 accounts receivable balance. (The allowance method 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., w hich 17. Sold office equipment in exchange for $135,000 cash plus receipt of a $100,000 depreciation of $64,000 as of October 17 Nov. 30. Journalized the monthly payroll for November, based on the following data Salaries Sales salaries Office salaries 539.266 12,735 3,184 135,000 Income tax withheld 77.250 Social security tax withheld $212.250 Medicare tax withheld Unemployment tax rates: State unemployment Federal unemployment 5,4% 08% Amount subject to unemployment taxes: State unemployment Federal une 5,000 5,000 30. Journalized the employer's payroll taxes on the payroll. Continued) the payment of the Sepeember 15 note at maturiry wension cost for the year was $190,400, of which $139,700 Chapter 10 Cument Liabilities and Payro 700 was paid to t 31. The pensin curent on the folowing data, prepare a bank reconciliation for a. Balance December ot n I. Journalixe the selected transac 2. Based on according to the bank statement at December 31, 5283,000 e according to the ledger at December 31, $245,410. s outstanding at December 31, $68,560 in transit, not recorded by bank, $29.500 recorded is t e. Bank debit memo for service charges, $750o. A check for $12,700 in payment of an hase byn Kthe bunk reconcilistion prepared in (z), Hoaurmalize the entry or exnr made by Kornett Company accounts as $12,000 ased on the following selected data, journalize the adjusting entries as of of the current year a. Estimated uncollectile accounts at December 31, $16,000, based on December 1 accounts receivable. The balance of Allowance for Doubtful Accounts at Ding was $2,000 (debit). of $3,300 b. The physical inventory on December 31 indicated an inventory shrinka Prepaid insurance expired during the year, $22,820. d. Office supplies used during the year, $3,920. e. Depreciation is computed as follows Useful Life in Years ResidualAcquisition Method Used Buildings$900.000 January 2 Office Equip 246,000 26,000 January 3 Store Equip. 112.000 12,000 July 1 50 Straight-line f. A patent costing $48,000 when acquired on January 2 has a remaini &. The cost of mineral rights was $546,000. Of the estimated deposit of 910 h. Vacation pay expense for December, $10,500. i. A product warranty was granted beginning December 1 and covering a one veet i. Interest was accrued on the note receivable received on October 17 acquired on January 2 has a remaining legal lide c 10 years and is expected to have value for eight years. of ore, 50,000 tons were mined tons and sold during the 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 The merchandise inventory is stated at cost by the LIFO method. The product warranty payable is a current liability Vacation pay payable: Current liability Long-term liability 3,360 The unfunded pension liability is a long-term liability. Notes payable Current liability Long-term liability 70,000 630,000 Chapter 10 Current Liabilities and Payroll 497 Kornett Company Post-Closing Trial Balance December 31, 2016 Debit Balances Credit Balances Cash 4,500 . 243,960 100,000 470,000 Merchandise Inventory Prepaid Insurance .. Land 16,000 320,000 1,875 . . 45,640 13,400 654,925 900,000 36,000 246,000 44,000 112,000 Accumulated Depreciation-Store Equipment... Mineral Rights 30,000 42,000 25,470 4,710 Medicare Tax Payable Employees Federal Income Tax Payable State Unemployment Tax Payable . .. . Federal Unemployment Tax Payable 40,000 . . . . 270 40 157,000 131,600 28,000 76,000 10,500 50,700 700,000 500,000 1,845,010 Product Warranty Pay Vacation Pay Payable .. Unfunded Pension Liability 3,700,300 3,700,300

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