Question 1 of 2
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Pronghorn Company
Balance Sheet (Partial)
December 31, 2025
Cash
$49,500
Accounts payable
$56,810
Accounts receivable
$98,700
Notes payable
70,790
Less: Allowance for doubtful accounts
7,760
90,940
$127,600
Inventory
181,950
Prepaid expenses
8,790
$331,180
-/15
The following errors in the corporation's accounting have been discovered:
1. January 2026 cash disbursements entered as of December 2025 included payments of accounts payable in the amount of
$43,500, on which a cash discount of 2% was taken.
2. The inventory included $29,640 of merchandise that had been received at December 31 but for which no purchase invoices
had been received or entered. Of this amount, $12,950 had been received on consignment; the remainder was purchased
f.o.b. destination, terms 2/10, n/30.
3. Sales for the first four days in January 2026 in the amount of $30,890 were entered in the sales journal as of December 31,
2025. Of these, $21,670 were sales on account and the remainder were cash sales.
4. Cash, not including cash sales, collected in January 2026 and entered as of December 31, 2025, totaled $36,794. Of this
amount, $24,794 was received on account after cash discounts of 2% had been deducted; the remainder represented the
proceeds of a bank loan.
