Kenseth corporation_journal and adjusting entries

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).

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.

15

 

Kenseth sold for $5,070 on account inventory that cost $3,450.

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.

 

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