In order to the Kendo Globalization work correctly you need to include the correct additional culture scripts after you have included the Kendo scripts.
So in you case you need the to include the kendo.culture.is-IS.js
script:
<script src="jquery.js"></script>
<script src="kendo.all.min.js"></script>
<script src="kendo.culture.is-IS.js"></script>