The following data are for Ernst Company. (All inventory is purchased on account, and Accounts Payable relates

Question:

The following data are for Ernst Company. (All inventory is purchased on account, and Accounts Payable relates only to the purchase of inventory.)

................................................................... Dec. 31, 2013 ...............Dec. 31, 2012

BALANCE SHEET DATA (partial)

Accounts receivable . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 72,000 .................... $65,000

Inventory . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 54,000 ....................... 41,000

Prepaid rent . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ? ............................ 8,000

Accounts payable . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 44,000 ....................... 52,000

Wages payable . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23,000 .......................... ?

INCOME STATEMENT DATA

Sales . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $485,000

Cost of goods sold . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ?

Wages expense. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ?

Rent expense . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22,000

Other expenses. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 121,000

Net income. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ?

CASH FLOW DATA

Net income. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ?

+/− Change in accounts receivable . . . . . . . . . . . . . . . . . . . . . . . . . . . . (7,000)

+/− Change in inventory . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (13,000)

+/− Change in accounts payable . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (8,000)

+/− Change in prepaid rent . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ?

+/− Change in wages payable . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6,000

Cash from operating activities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ?

OTHER DATA

Cash collected from customers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ?

Cash paid for inventory . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ?

Inventory purchased on account. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 230,000

Cash paid for rent . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27,000

Cash paid for wages . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 81,000

Cash paid for other expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 121,000

Instructions:

Compute the following:

1. The ending balance in the prepaid rent account.

2. The beginning balance in the wages payable account.

3. The amount of Cost of Goods Sold for 2013.

4. The amount of Wages Expense for 2013.

5. The amount of reported Net Income for 2013.

6. The amount of cash collected from customers during 2013.

7. The amount of cash paid for inventory during 2013.

Accounts Payable
Accounts payable (AP) are bills to be paid as part of the normal course of business.This is a standard accounting term, one of the most common liabilities, which normally appears in the balance sheet listing of liabilities. Businesses receive... Accounts Receivable
Accounts receivables are debts owed to your company, usually from sales on credit. Accounts receivable is business asset, the sum of the money owed to you by customers who haven’t paid.The standard procedure in business-to-business sales is that...