Knseth sold for 3500 equipment which originally cost 5000

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Reference no: EM13581040

Kenseth Corporation's unadjusted trial balance at December 1, 2014, is presented below.

	Debit	Credit
Cash	$22,000
Accounts Receivable	36,800
Notes Receivable	10,000
Interest Receivable	-0-
Inventory	36,200
Prepaid Insurance	3,600
Land	20,000
Buildings	150,000
Equipment	60,000
Patent	9,000
Allowance for Doubtful Accounts		$500
Accumulated Depreciation-Buildings		50,000
Accumulated Depreciation-Equipment		24,000
Accounts Payable		27,300
Salaries and Wages Payable		-0-
Notes Payable (due April 30, 2015)		11,000
Interest Payable		-0-
Notes Payable (due in 2020)		35,000
Common Stock		50,000
Retained Earnings		63,600
Dividends	12,000
Sales Revenue		900,000
Interest Revenue		-0-
Gain on Disposal of Plant Assets		-0-
Bad Debt Expense	-0-
Cost of Goods Sold	630,000
Depreciation Expense	-0-
Insurance Expense	-0-
Interest Expense	-0-
Other Operating Expenses	61,800
Amortization Expense	-0-
Salaries and Wages Expense	110,000
Total	$1,161,400	$1,161,400

The following transactions occurred during December.

Dec. 2		Kenseth purchased equipment for $16,000, plus sales taxes of $800 (all paid in cash).
2		Kenseth sold for $3,500 equipment which originally cost $5,000. Accumulated depreciation on this equipment at January 1, 2014, was $1,800; 2014 depreciation prior to the sale of equipment was $825.
15		Kenseth sold for $5,000 on account inventory that cost $3,500.
23		Salaries and wages of $6,600 were paid.

Adjustment data:

1.		Kenseth estimates that uncollectible accounts receivable at year-end are $4,000.
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 $3,600, 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 $30,000.
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 $1,800.
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 $2,200.
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 $15,000. It was unpaid at December 31.

Reference no: EM13581040

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