Question

Kenseth Corporation’s unadjusted trial balance at December 1, 2014, is presented Below.


The following transactions occurred during December.
Dec. 2 Purchased equipment for $16,000, plus sales taxes of $800 (paid in cash).
2 Kenseth sold for $3,500 equipment which originally cost $5,000. Accumulated depreciation on this equipment at January 1, 2014, was $1,800; 2014 depreciation prior to the sale of equipment was $825.
15 Kenseth sold for $5,000 on account inventory that cost $3,500.
23 Salaries and wages of $6,600 were paid.
Adjustment data:
1. Kenseth estimates that uncollectible accounts receivable at year-end are $4,000.
2. The note receivable is a one-year, 8% note dated April 1, 2014. No interest has been recorded.
3. The balance in prepaid insurance represents payment of a $3,600, 6-month premium on September 1, 2014.
4. The building is being depreciated using the straight-line method over 30 years. The salvage value is $30,000.
5. The equipment owned prior to this year is being depreciated using the straight-line method over 5 years. The salvage value is 10% of cost.
6. The equipment purchased on December 2, 2014, is being depreciated using the straight-line method over 5 years, with a salvage value of $1,800.
7. The patent was acquired on January 1, 2014, and has a useful life of 9 years from that date.
8. Unpaid salaries at December 31, 2014, total $2,200.
9. Both the short-term and long-term notes payable are dated January 1, 2014, and carry a 10% interest rate. All interest is payable in the next 12 months.
10. Income tax expense was $15,000. It was unpaid at December 31.

Instructions
(a) Prepare journal entries for the transactions listed above and adjusting entries.
(b) Prepare an adjusted trial balance at December 31, 2014.
(c) Prepare a 2014 income statement and a 2014 retained earnings statement.
(d) Prepare a December 31, 2014, balancesheet.


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  • CreatedApril 07, 2014
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