The comparative balance sheet of Yellow Dog Enterprises Inc. at December 31, 20Y8 and 20Y7, is as follows: 1 Dec. 31, 20Y8 Dec. 31, 20Y7 2 Assets 3 Cash $80,000.00 $100,000.00 4 Accounts receivable (net) 275,000.00 300,000.00 5 Merchandise inventory 510,000.00 400,000.00 6 Prepaid expenses 15,000.00 10,000.00 7 Equipment 1,070,000.00 750,000.00 8 Accumulated depreciation (200,000.00) (160,000.00) 9 Total assets $1,750,000.00 $1,400,000.00 10 Liabilities and Stockholders’ Equity 11 Accounts payable (merchandise creditors) $100,000.00 $90,000.00 12 Mortgage note payable 0.00 400,000.00 13 Common stock, $10 par 600,000.00 200,000.00 14 Paid-in capital: Excess of issue price over par—common stock 300,000.00 100,000.00 15 Retained earnings 750,000.00 610,000.00 16 Total liabilities and stockholders’ equity $1,750,000.00 $1,400,000.00 Additional data obtained from the income statement and from an examination of the accounts in the ledger for 20Y8 are as follows: A. Net income, $190,000. B. Depreciation reported on the income statement, $115,000. C. Equipment was purchased at a cost of $395,000, and fully depreciated equipment costing $75,000 was discarded, with no salvage realized. D. The mortgage note payable was not due for six years, but the terms permitted earlier payment without penalty. E. 40,000 shares of common stock were issued at $15 for cash. F. Cash dividends declared and paid, $50,000.

Financial And Managerial Accounting

15th Edition

ISBN:9781337902663

Author:WARREN, Carl S.

Publisher:WARREN, Carl S.

Chapter5: Accounting For Retail Businesses

Section: Chapter Questions

Problem 41E: Cost of goods sold and related items The following data were extracted from the accounting records...

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The comparative balance sheet of Yellow Dog Enterprises Inc. at December 31, 20Y8 and 20Y7, is as follows:

1		Dec. 31, 20Y8	Dec. 31, 20Y7
2	Assets
3	Cash	$80,000.00	$100,000.00
4	Accounts receivable (net)	275,000.00	300,000.00
5	Merchandise inventory	510,000.00	400,000.00
6	Prepaid expenses	15,000.00	10,000.00
7	Equipment	1,070,000.00	750,000.00
8	Accumulated depreciation	(200,000.00)	(160,000.00)
9	Total assets	$1,750,000.00	$1,400,000.00
10	Liabilities and Stockholders’ Equity
11	Accounts payable (merchandise creditors)	$100,000.00	$90,000.00
12	Mortgage note payable	0.00	400,000.00
13	Common stock, $10 par	600,000.00	200,000.00
14	Paid-in capital: Excess of issue price over par—common stock	300,000.00	100,000.00
15	Retained earnings	750,000.00	610,000.00
16	Total liabilities and stockholders’ equity	$1,750,000.00	$1,400,000.00

Additional data obtained from the income statement and from an examination of the accounts in the ledger for 20Y8 are as follows:

A.	Net income, $190,000.
B.	Depreciation reported on the income statement, $115,000.
C.	Equipment was purchased at a cost of $395,000, and fully depreciated equipment costing $75,000 was discarded, with no salvage realized.
D.	The mortgage note payable was not due for six years, but the terms permitted earlier payment without penalty.
E.	40,000 shares of common stock were issued at $15 for cash.
F.	Cash dividends declared and paid, $50,000.

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