Question - Kenseth Corporation's unadjusted trial balance at December 1, 2014, is presented below.
|
Debit
|
Credit
|
|
Cash
|
$26,760
|
|
|
Accounts Receivable
|
36,780
|
|
|
Notes Receivable
|
9,100
|
|
|
Interest Receivable
|
-0-
|
|
|
Inventory
|
36,400
|
|
|
Prepaid Insurance
|
3,870
|
|
|
Land
|
21,600
|
|
|
Buildings
|
153,000
|
|
|
Equipment
|
61,100
|
|
|
Patent
|
9,630
|
|
|
Allowance for Doubtful Accounts
|
|
$570
|
|
Accumulated Depreciation-Buildings
|
|
51,000
|
|
Accumulated Depreciation-Equipment
|
|
24,440
|
|
Accounts Payable
|
|
28,200
|
|
Salaries and Wages Payable
|
|
-0-
|
|
Notes Payable (due April 30, 2015)
|
|
11,600
|
|
Interest Payable
|
|
-0-
|
|
Notes Payable (due in 2020)
|
|
35,620
|
|
Common Stock
|
|
57,300
|
|
Retained Earnings
|
|
32,330
|
|
Dividends
|
12,800
|
|
|
Sales Revenue
|
|
927,800
|
|
Interest Revenue
|
|
-0-
|
|
Gain on Disposal of Plant Assets
|
|
-0-
|
|
Bad Debt Expense
|
-0-
|
|
|
Cost of Goods Sold
|
634,500
|
|
|
Depreciation Expense
|
-0-
|
|
|
Insurance Expense
|
-0-
|
|
|
Interest Expense
|
-0-
|
|
|
Other Operating Expenses
|
61,220
|
|
|
Amortization Expense
|
-0-
|
|
|
Salaries and Wages Expense
|
102,100
|
|
|
Total
|
$1,168,860
|
$1,168,860
|
The following transactions occurred during December.
Dec. 2 Kenseth purchased equipment for $17,400, plus sales taxes of $1,800 (all paid in cash).
Dec. 2 Kenseth sold for $3,580 equipment which originally cost $4,900. Accumulated depreciation on this equipment at January 1, 2014, was $1,990; 2014 depreciation prior to the sale of equipment was $410.
Dec. 15 Kenseth sold for $5,070 on account inventory that cost $3,450.
Dec. 23 Salaries and wages of $6,450 were paid.
Adjustment data:
1. Kenseth estimates that uncollectible accounts receivable at year-end are $3,910.
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 $3,870, 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 $31,500.
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 $2,280.
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 $2,090.
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 $12,050. It was unpaid at December 31.
Required - Prepare journal entries for the transactions listed above and adjusting entries.