Comprehensive Problem 3 Part 1: Selected transactions completed by Komett Company during its first fiscal year ended December 31, 2045, were as follows: 1. Journalize the selected transactions. Assume 360 days per year. If no entry is required, select "No entry required" from the dropdown and leave the amount boxes blank. If an amount box does not require an entry, leave it blank. Jan. 3: Issued a check to establish a petty cash fund of $4,500 Date Description Debit Credit Jan, 3 Petty Cash 4,500 Cash 4,500 Feb. 26: Replenished the petty cash fund, based on the following summary of petty cash receipts: office supplies, 51,680; miscellaneous selling expense, 5570; miscellaneous administrative expense, $830 Description Debit Credit Feb. 26 Office Supplies 1,680 Miscellaneous Selling Expense Miscellaneous Administrative Expense 3,130 570 880 Apr. 14: Purchased $31,300 of merchandise on account, terms n/30. The perpetual Inventory system is used to account for Inventory Date Description Debit Credit Apr. 14 Inventory 31,300 Accounts Payable 31,300 May 13: Paid the invoice of April 14, Date Description May 13 Accounts Payable Debit Credit 31,300 31,300 May 17: Received cash from dally cash sales for $21,200. The amount indicated by the cash register was $21,240, Date Description Debit Credit May 17 Cash 21,200 Cash Short and Over 40 Sales 21,240 June 2: Received a 60-day, 8% note for $180,000 on the Ryanair account. Date Description Debit Credit June 2 Notes Receivable 180,000 Accounts Receivable-Ryanair 180,000 Aug. 1: Received amount owed on June 2 note, plus interest at the maturity date. Date Description Debit Credit Aug. 1 Cash 182,400 Notes Receivable 180,000 Interest Revenue 2,400 Aug. 24: Received $7,500 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.) Date Description Debit Credit Aug 24 Cash 7,600 Allowance for Doubtful Accounts 1,400 Accounts Receivable Finley 9,000 Sept. 15: Reinstated the Finley account written off on August 24 and received $1.400 cash in full payment. Date Description Debit Credit Sept. 15 Accounts Receivable-Finley 1,400 Allowance for Doubtful Accounts 1,400 Cash 1,400 Accounts Receivable-Finley 1,400 Sept. 15: Purchased land by issuing a $670,000, 90-day note to Zahorik Co., which discounted it at 9%. Date Description Debit Credit Sept. 15 Land 654,925 Interest Expense 15,075 Notes Payable 670,000 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, Description Debit Credit Date Oct. 12 Cash 135,000 Notes Receivable 100,000 64,000 Accumulated Depreciation Office Equip Loss on sale of Office Equipment Office Equipment 21,000 320,000 Nov. 30: Journalized the monthly payroll for November, based on the following data: Salaries Deductions Sales salaries $135,000 Income tax withheld $39,266 12,735 3,184 Office salaries 77,250 Social security tax withheld $212,250 Medicare tax withheld Unemployment tax rates: State unemployment 5.4% Federal unemployment 0.8% Amount subject to unemployment taxes: State unemployment $5,000 Federal unemployment 5,000 Date Description Debit Credit Nov. 30 Sales Salaries Expense 135,000 Office Salaries Expense 77,250 Employees Income Tax Payable 39,266 Social Security Tax Payable 12,735 Medicare Tax Payable 3,184 Cash 157,065 Nov. 30: Journalized the employer's payroll taxes on the payroll. Date Description Debit Credit Nov. 30 Payroll Taxes Expense 16,229 Social Security Tax Payable 12,735 Medicare Tax Payable 3,184 270 State Unemployment Tax Payable Federal Unemployment Tax Payable 40 Dec. 14: Journalized the payment of the September 15 note at maturity, Date Description Debit Credit Dec, 14 Notes Payable 670,000 Cash 670,000 Dec. 31: The pension cos the year was $190,400, of which $139,700 was paid to the pension plan trustee. Date Description Debit Credit Dec. 31 Pension Expense 190,400 Cash 139,700 Unfunded Pension Liability 50,700 Kornett Company Bank Reconciliation December 31, 2015 Balance according to bank statement 283,000 Add: Deposit in transit on December 31 Deduct: Outstanding checks 29,500 68,540 Adjusted balance 243,960 245,410 Balance according to company's records Deduct: Bank service charges Deduct: Error in recording check 750 700 Total deductions 1,450 Adjusted balance 243,960 Note: You must complete parts 1 and 2 before completing part 3 of this comprehensive problem, Based on the bank reconciliation prepared in (2), journalize the entry or entries to be made by Kornett Company. Use the Miscellaneous Administrative Expense account to record bank service charges. If an amount box does not require an entry leave it blank Debit Credit Date Description Dec. 31 Miscellaneous Administrative Expense Accounts Payable 750 700 Cash 1,450 Comprehensive Problem 3 Part 4: Note: You must complete parts 1, 2, and 3 before completing part 4 of this comprehensive problem. Based on the following selected data, journalize the adjusting entries as of December 31 of the current year If no entry is required, select "No entry required" from the dropdown and leave the amount boxes blank. If an amount box does not require an entry, leave it blank. a. Estimated uncollectible accounts at December 31, 516,000, based on an aging of accounts receivable. The balance of Allowance for Doubtful Accounts at December 31 was $2,000 (debit) Date Description Debit Credit Dec. 31 b. The physical Inventory on December 31 indicated an inventory shrinkage of $3,300. Date Description Debit Credit Dec. 31 c. Prepaid insurance expired during the year, $22,820. Date Description Debit Credit Dec. 31 d. Office supplies used during the year, $3,920. Date Description Debit Credit Dec. 31 e. Depreciation is computed as follows: Asset Cost Residual Acquisition Useful Life Value Date in Years 50 Buildings Office Equip Store Equip $900,000 246,000 112,000 $0 January 2 26,000 January 3 12,000 July 1 Depreciation Method Used Double-declining-balance Straight-line Straight-line 5 10 Date Description Debit Credit Dec. 31 1. A patent costing $48,000 when acquired on January 2 has a remaining legal life of 10 years and is expected to have value for 8 years Date Description Debit Credit Dec. 31 9. The cost of mineral rights was $546,000 of the estimated deposit of 910,000 tons of ore, 50,000 tons were mined and sold during the year Date Description Debit Credit Dec. 31 h. Vacation pay expense for December, $10,500. Description Debit Credit Dec. 31 1. A product warranty was granted beginning December 1 and covering a one-year period. The estimated cost is 4 of sales, which totaled $1,900,000 in December Date Description Debit Credit Dec. 31 j. Interest was accrued on the note receivable received on October 17 ($100,000, 90-day, 9 note). Assume 360 days per year Date Description Debit Credit Dec. 31 Comprehensive Problem 3 Part 5: Note: You must complete parts 1, 2, 3, and 4 of this comprehensive problem before completing part 5. Based on the following information and the post-closing trial balance that follows, prepare a balance sheet in report format 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 $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 Komment con Post-Closing Trial Balance December 31, 2015 Account Tube Debt Balances Credit Balances Potty Cash 4.500 Cash 243 950 Notes Receivable 100.000 Account Receivable 470.000 Allowance for Doubtful Accounts 16.000 Inventory 320.000 Interest Receivable 1.875 Prepaid Insurance 45.540 Office Supplies 13.400 Land 654.925 Buildings 900.000 Accumulated Depreciation-Buildings 35.000 Office Equipment 246.000 Accumulated Depreciation--Office Equipment 44.000 Store Equipment 112.000 Accumulated Depreciation-Store Equipment 5.000 Mineral Rights 546.000 Accumulated Depletion 30.000 Pacents 42.000 Social Security Text Payable 25.470 Medicare Payable 4.710 Employees Federal Income Tax Payable 40.000 State Unemployment Tax Payable Federal Unemployment Tax Payable Sales Payable 137.000 Accounts Payable 131.600 28.000 Product Warranty Payable 75.000 Vation Pay Payable Unfunded pension Liability 50.700 Nos Payable 700.000 Common Stock 500.000 3.700 100 3.700.300 Kornett Company Balance Sheet December 31, 2015 Assets Current assets: Total current assets ang Cycle Project 4 Property, plant, and equipment: Total property, plant, and equipment Intangible assets: Total assets Liabilities Current liabilities: Total current liabilities Long-term liabilities: Total long-term liabilities Total liabilities Stockholders' Equity Total stockholders' equity Total liabilities and stockholders' equity