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Question 1 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.

Question 1

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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