Textbook Problem

Selected transactions completed by Kornett Company during its first fiscal year ended December 31, 20Y5, were as follows:

Instructions

1. 1. Journalize the selected transactions.
2. 2. Based on the following data, prepare a bank reconciliation for December of the current year:
3. ■ Balance according to the bank statement at December 31, $283,000.
4. ■ Balance according to the ledger at December 31, $245,410.
5. ■ Checks outstanding at December 31. $68,540.
6. ■ Deposit in transit, not recorded by bank, $29500.
7. ■ Bank debit memo for service charges, $750.
8. ■ A check for $12,700 in payment of an invoice was incorrectly recorded in the accounts as $12,000.
9. 3. 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.
10. 4. Based on the following selected data, journalize the adjusting entries as of December 31 of the current year:
11. A.    Estimated uncollectible accounts at December 31, $16,000, based on an aging of accounts receivable. The balance of Allowance for Doubtful Accounts at December 31 was $2,000 (debit).
12. B.     The physical inventory on December 31 indicated an inventory shrinkage of $3,300.
13. C.     Prepaid insurance expired during the year, $22,820.
14. D.    Office supplies used during the year, $3,920.
15. E.     Depreciation is computed as follows:

1. F.      A patent costing $48,000 when acquired on January 2 has a remaining legal lie of 10 years and is expected to have value for 8 years.