Section 3. Problems
8. Yates Company’s records provide the following information concerning
certain account balances and changes in these account balances dur-
ing the current year. Transaction information is missing from each
Prepare the ENTRY to record the missing information for each
account. (Consider each independently.)
1. Accounts Receivable: Jan. 1, balance $41,000, Dec. 31,
balance $50,000, uncollectible accounts written off during the
year, $6,000; accounts receivable collected during the year,
$134,000. Prepare the entry to record sales.
2. Allowance for Doubtful Accounts: Jan. 1, balance $4,000,
Dec. 31, balance $7,500, uncollectible accounts written off
during the year, $30,000. Prepare the entry to record bad debt
3. Accounts Payable: Jan. 1, balance $25,000, Dec. 31, balance
$34,000, purchases on account for the year, $110,000. Prepare
the entry to record payments on account.
4. Interest Receivable: Jan. 1 accrued, $3,000, Dec. 31 accrued,
$2,100, earned for the year, $20,000. Prepare the entry to
record cash interest received.
The following information is available for Renn Corporation’s first
year of operations:
Payment for merchandise purchases $350,000
Ending merchandise inventory 110,000
Accounts payable (balance at end of year) 60,000
Collections from customers 270,000
The balance in accounts payable relates only to merchandise pur-
chases. All merchandise items were marked to sell at 40% above
cost. What should be the ending balance in accounts receivable,
assuming all accounts are deemed collectible?
9. Presented below is information related to Gregg Company.
Retained earnings, December 31, 2003 $ 650,000
Selling and administrative expenses 240,000
Hurricane loss (pre-tax) on plant (extraordinary item) 250,000
Cash dividends declared on common stock 33,600
Cost of goods sold 960,000
Gain resulting from computation error on depreciation
charge in 2002 (pre-tax) 520,000
Other revenue 60,000
Other expenses 50,000
Prepare in good form a multiple-step income statement for the year
2004. Assume a 30% tax rate and that 100,000 shares of common stock
were outstanding during the year.
Section 3. Problems