Question

Kyla Co. prepared an aging of its accounts receivable at December 31, 2020 and determined that the net realizable value of the receivables was $580,000. Additional information for calendar 2020 follows:

Allowance for doubtful accounts, Jan 1	$68,000 (cr.)
Uncollectible account written off during year	46,000
Bad debt expense for 2020	28,000
Uncollectible accounts recovered during year	10,000

          

At the year end December 31, 2020, Kyla Co.’s Accounts receivable balance should be

	1) $640,000.00
	2) $658,000.00
	3) $644,000.00
	4) $652,000.00

Consider an asset for which the following information is available:

Original cost	$48,000
Residual value	$5,000
Estimated useful life	5 years
Depreciation method	Double-declining balance method

The depreciation expense for the last year of this asset's useful life is

	1) $2,229.00
	2) $573.00
	3) $2,488.00
	4) $1,221.00

Kayden Ltd. had a current ratio of 4.24 in 2019 and 5.64 in 2020. Which of the following is the best explanation?

	1) A decrease in current liabilities.
	2) An increase in cash and equivalents and short-term investments.
	3) A decrease in long-term liabilities.
	4) An increase in current assets that exceeded the increase in current liabilities.

Annie Sweet Corporation is specialized in making wedding cakes. Customers are always required to pay a deposit equal to the full purchase price when they place orders. During the month of September 2019, Annie Sweet Corporation received $34,000 in customer deposits. The balance in its Unearned Revenue account was $14,000 at September 1, 2019 and $16,000 at September 30, 2019. How much revenue did Annie Sweet Corporation recognize during the month of September 2019?

	1) $34,000
	2) $30,000
	3) $32,000
	4) $36,000

Answer 1

Please give positive ratings so I can keep answering. It would help me a lot. Please comment if you have any query. Thanks!

Kyla Co.	Amount $
Allowance for doubtful accounts, Jan 1	68,000.00
Less: Uncollectible account written off during year	46,000.00
Add: Bad debt expense for 2020	28,000.00
Add: Uncollectible accounts recovered during year	10,000.00
Allowance for doubtful accounts, Dec 31	60,000.00
Add: Net realizable value of the receivables	580,000.00
Accounts receivable, Dec 31	640,000.00
So answer is option 1, $ 640,000.

Double Declining Method	Amount $	Note
Total cost	48,000.00	A
Life	5.00	B
Annual depreciation	9,600.00	C=A/B
Depreciation rate	20.00%	D=C/A
Double Depreciation %	40.00%	E=D*2
Depreciation for year 1	19,200.00	F=A*E
Book value at the end of year 1	28,800.00	G=A-F
Depreciation for year 2	11,520.00	H=G*E
Book value at the end of year 2	17,280.00	I=G-H
Depreciation for year 3	6,912.00	J=I*E
Book value at the end of year 3	10,368.00	K=I-J
Depreciation for year 4	4,147.00	L=K*E
Book value at the end of year 4	6,221.00	M-K-L
Depreciation for year 4	2,488.00	N-M*E
So answer is option 3, $ 2,488.

Kayden Ltd.

4) An increase in current assets that exceeded the increase in current liabilities.

Annie Sweet Corporation	Amount $
Unearned Revenue at September 1, 2019	14,000.00
Add: Deposits received	34,000.00
Less: Unearned Revenue at September 30, 2019	16,000.00
Revenue recognized in Sep, 2019	32,000.00
So answer is option 3, $ 32,000.