Determine the appropriateness of journal entries in terms of generally accepted accounting principles or assumptions. (SO 4, 5) PAP-2A Presented below are a number of business transactions that occurred during the cur- rent year for Yerkes, Inc. 1. Because the general level of prices increased during the current year, Yerkes, Inc. determined that there was a $10,000 understatement of depreciation expense on its equipment and de- cided to record it in its accounts. The following entry was made. Depreciation Expense Accumulated Depreciation 10,000 10,000 2. Because of a "flood sale, equipment obviously worth $250,000 was acquired at a cost of $200,000. The following entry was made. Equipment Cash Gain on Purchase of Equipment 250,000 200,000 50,000 3. The president of Yerkes, Inc. used his expense account to purchase a new Saab 9000 solely for personal use. The following entry was made. Miscellaneous Expense Cash 34,000 34,000 4. An order for $30,000 has been received from a customer for products on hand. This order is to be shipped on January 9 next year. The following entry was made. Accounts Receivable Sales | 30,000 | 30,000 5. Materials were purchased on March 31 for $65,000. This amount was entered in the Inventory account. On December 31, the materials would have cost $80,000, so the following entry was made. Inventory Gain on Inventories 15,000 15,000 Problems: Set A AP-25