Reference no: EM132439218
Questions -
Q1) The balance of accounts receivable is $275,000. The allowance for uncollectible accounts has a credit balance of $240. Net credit sales for the year were $771,000 and cash sales were $68,000. Information for estimating uncollectible accounts expense is presented below. For each independent situation, prepare the adjusting entry to record the estimate and determine the resultant balance in the allowance for uncollectible accounts.
a. The company uses the aging-of-accounts-receivable method. A partial aging of accounts receivable balance is presented below:
|
Days Outstanding
|
Amount
|
Percentage Uncollectible
|
|
Not yet due
|
$150.000
|
1%
|
|
31-60 days past due
|
50,000
|
5%
|
|
61-90 days past due
|
40,000
|
10%
|
|
91-120 days past due
|
25,000
|
25%
|
|
Over 120 days past due
|
10,000
|
50%
|
b. The company uses the percent-of-sales method. Historical data indicates that approximately 3% of net credit sales are uncollectible.
Q2) Martin Manufacturing held three interest-bearing notes during 2005 and 2006. For each note, determine the following items.
a. The maturity date
b. The maturity value
c. Interest revenue to be reported on December 31, 2005
Note 1 - issued September 25, 2005, $15,000, 10%, 60 days.
Note 2 - issued November 20, 2005, $25,000, 12%. 90 days.
Note 3 - issued December 30, 2005, 14,000, 9%, 30 days.
Q3. McAfee Construction acquired the following plant assets on January 1, 2109. The delivery equipment was driven for 12,000 miles of its useful estimated life of 100,000 miles. Compute depreciation for each of the assets. For the year ending 2009:
|
Residual
|
|
Assets
|
Cost
|
Value
|
Useful Life
|
Depreciation Method
|
|
Office Equipment
|
$150,000
|
$5,000
|
5 years
|
Straight-line
|
|
Building
|
$240,000
|
$20,000
|
20 years
|
Double-declining balance
|
|
Delivery equipment
|
$125,000
|
$25,000
|
10 years
|
Units-of-production
|
a. Office equipment
b. Building
c. Delivery equipment.