Selected transactions completed by Hirata Company during its first fiscal year ending December 31 were as follows:

Jan. 2. Issued a check to establish a petty cash fund of $1,400.

Mar. 1. Replenished the petty cash fund, based on the following summary of petty cash receipts: office supplies, $678; miscellaneous selling expense, $389; miscellaneous administrative expense, $245.

Apr. 5. Purchased $12,000 of merchandise on account, terms 1/10, n/30. The perpetual inventory system is used to account for inventory.

May 5. Paid the invoice of April 5 after the discount period had passed.

10. Received cash from daily cash sales for $7,755. The amount indicated by the cash register was $7,775.

June 2. Received a 60-day, 8.4% note for $60,000 on the Stevens account.

Aug. 1. Received amount owed on June 2 note, plus interest at the maturity date.

3. Received $2,300 on the Jacobs account and wrote off the remainder owed on a

$2,500 accounts receivable balance. (The allowance method is used in accounting for uncollectible receivables.)

28. Reinstated the Jacobs account written off on August 3 and received $200 cash in full payment.

Sept. 2. Purchased land by issuing a $250,000, 90-day note to Ace Development Co., which discounted it at 8%.

Oct. 2. Sold office equipment in exchange for $55,000 cash plus receipt of a $25,000, 120-day, 6% note. The equipment had cost $96,000 and had accumulated depreciation of $10,000 as of October 1.

Nov. 30. Journalized the monthly payroll for November, based on the following data:

Nov. 30. Journalized the employer's payroll taxes on the payroll.
Dec. 1. Journalized the payment of the September 2 note at maturity.
30. The pension cost for the year was $65,000, of which $57,450 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, $123,200.
b. Balance according to the ledger at December 31, $108,680.
c. Checks outstanding at December 31, $27,450.
d. Deposit in transit, not recorded by bank, $12,450.
e. Bank debit memorandum for service charges, $280.
f. A check for $330 in payment of an invoice was incorrectly recorded in the accounts as $130.
3. Based on the bank reconciliation prepared in (2), journalize the entry or entries to be made by Hirata Company.
4. Based on the following selected data, journalize the adjusting entries as of December 31 of the current year:
a. Estimated uncollectible accounts at December 31, $6,490, based on an aging of accounts receivable. The balance of Allowance for Doubtful Accounts at December 31 was $600 (debit).
b. The physical inventory on December 31 indicated an inventory shrinkage of $1,320.
c. Prepaid insurance expired during the year, $9,850.
d. Office supplies used during the year, $1,580.
e. Depreciation is computed as follows:

f. A patent costing $18,600 when acquired on January 2 has a remaining legal life of nine years and is expected to have value for six years.
g. The cost of mineral rights was $185,000. Of the estimated deposit of 333,000 tons of ore, 22,500 tons were mined during the year.
h. Vacation pay expense for December, $4,400.
i. A product warranty was granted beginning December 1 and covering a one-year period. The estimated cost is 2.5% of sales, which totaled $796,000 in December.
j. Interest was accrued on the note receivable received on October 2.
5. Based on the following information and the post-closing trial balance shown on the following page, 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 ........ $3,000
Long-term liability ...... 1,400
The unfunded pension liability is a long-term liability.
Notes payable:
Current liability ........$25,000
Long-term liability ...... 75,000
6. On February 7 of the following year, the merchandise inventory was destroyed by fire. Based on the following data obtained from the accounting records, estimate the cost of the merchandise destroyed:
Jan. 1 Merchandise inventory ......$140,600
Jan. 1–Feb. 7 Purchases (net) ...... 38,000
Jan. 1–Feb. 7 Sales (net) ........ 68,000
Estimated gross profit rate ....... 40%

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Salaries Deductions Sales salaries Office salaries $58,200 cme tax withheld $15,804 29,600 $87,800 Social security tax withheld Medicare tax withheld 5,120 1,317 Unemployment tax rates: State unemployment Federal unemployment 3.8% 0.8% Amount subject to unemployment taxes: State unemployment Federal unemployment $2,000 2,000 Depreciation Method Used Residual Acquisition Useful Life Asset Cost Value Date in Years 50 5 8 Buildings $380,000 $ 0 January 2 Straight-line Straight-line Office Equip. 90,000 14,000 October 2 Store Equip. 45,000 10,000 January 3 Double-declining-balance (at twice the straight-line rate) Hirata Company Post-Closing Trial Balance December 31, 2007 Debit Credit Balances Balances 1,400 25,000 Petty Cash . Allowance for Doubtful Accounts 6,490 Interest Receivable Prepaid Insurance Office Supplies Land. 375 19,700 7,100 245,000 7,600 3,800 11,250 12,500 Accumulated Depreciation-Buildings .. . Office Equipment.. Accumulated Depreciation-Office Equipment Accumulated Depreciation-Store Equipment Mineral Rights Accumulated Depletion Patents .. . 90,000 45,000 185,000 15,500 .. 9,910 2,700 15,887 42 9 90,000 125,300 3,000 19,900 4,400 7,550 100,000 1,044,837 1,465,175 Medicare Tax Payable Employees Federal Income Tax Payable Federal Unemployment Tax Payable Product Warranty Payable. ..._. .. Notes Payable.... . Goll, Capital .. . 1,465,175