Question

A Company has a $1,500 current balance in its Allowance for Doubtful Accounts. Using the Percent of Receivables Method and the chart below, what is the correct general journal entry to update the Allowance for Doubtful Accounts balance based on the information below?

Number of Days Past Due	Receivables Amounts	% Uncollectible	Allowance Account Balance
Current	$20,000	1%	$200
0-30	$10,000	5%	$500
31-60	$6,000	10%	$600
61-90	$2,500	25%	$625
Over 90	$1,000	50%	$500
Total	$39,500		$2,425

Select one:

a.

Uncollectible Accounts Expense	$2,425
Accounts Receivable		$2,425

b.

Allowance for Doubtful Accounts	$925
Uncollectible Accounts Expense		$925

c.

Uncollectible Accounts Expense	$2,425
Allowance for Doubtful Accounts		$2,425

d.

Uncollectible Accounts Expense	$925
Allowance for Doubtful Accounts		$925

Question 7

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A Company has a $1,500 current balance in its Allowance for Doubtful Accounts. Using the Percent of Receivables Method and the chart below, what is the net realizable value of Accounts Receivable after making any necessary adjusting entries?

Number of Days Past Due	Receivables Amounts	% Uncollectible	Allowance Account Balance
Current	$20,000	1%	$200
0-30	$10,000	5%	$500
31-60	$6,000	10%	$600
61-90	$2,500	25%	$625
Over 90	$1,000	50%	$500
Total	$39,500		$2,425

Select one:

a. $39,500

b. $37,075

c. $38,000

d. $38,575

Question 8

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A company purchased land and a building for $560,000. An appraisal indicated that the land was valued at $300,000 and the building was valued at $450,000. How should the purchase price be allocated to the land and the building? (Basket-Purchase)

Select one:

a. Land $280,000; Building $280,000

b. Land $300,000; Building $450,000

c. Land $300,000; Building $260,000

d. Land $224,000; Building $336,000

Question 9

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On January 1, 2015, a company purchased a a new piece of equipment to use in its business. The details of the purchase are as follows:

Purchase Price	$46,500
Shipping Costs	$300
Install/Setup Costs	$200
Salvage Value	$3,000
Useful Life	8 years

What is the capitalized cost of the equipment?

Select one:

a. $46,500

b. $46,800

c. $47,000

d. $46,700

Question 10

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On January 1, 2015, a company purchased a a new piece of equipment to use in its business. The details of the purchase are as follows:

Purchase Price	$46,500
Shipping Costs	$300
Install/Setup Costs	$200
Salvage Value	$3,000
Useful Life	8 years

Using the double-declining balance method, what is the depreciation expense in 2015?

Select one:

a. $11,750

b. $11,700

c. $11,675

d. $11,000

Answer 1

Solution 1:

Required balance for allowance for doubtful accounts = $2,425

Opening balance in allowance for doubtful accounts = $1,500

Required provision = $2,425 - $1,500 = $925

Hence uncollectibel accounts expense will be debited by $925 and allowance for doubtful account will be credited by $925. Hence option D is the right choice.

Solution 7:

Accounts receivable balance = $39,500

Allowance for doubtful accounts = $2,425

Net realizable value for accounts receivables = $39,500 - $2,425 = $37,075

Option B is the right choice.

Solution 8:

Purchase value of land and building = $560,000

appraised value of land = $300,000

Appraised value of building = $450,000

Purchase price to be allocated to land = $560,000 * $300,000/ $750,000 = $224,000

Purchase price to be allocated to Building = $560,000 * $450,000/ $750,000 = $336,000

Option D is the right choice.

Solution 9:

Capitalized cost of equipment = Purchase cost + Shipping cost + installation cost = $46,500 + $300 + $200 = $47,000

Option C is the right choice.

Solution 10:

Depreciation rate using double decline method = Depreciation rate of SLM * 2 = 1*2/8 = 25%

Depreciation expense for 2015 = $47,000*25% = $11,750

Hence Option A is the right choice.