Reference no: EM132711380

Question 1 - Company Z rents out part of their building in a 10 year contract. Each rental payment is $20,000 to be paid at the beginning of each year. Interest rate is 4%. What is the present value of the rental payments?

Question 2 - Company X had the following information before adjustments:

Accounts receivable $230,000 (debit balance)

Allowance for doubtful accounts $3400 (credit balance)

Sales revenue (on credit) $1,580,000 (credit balance)

Sales returns and allowances $85,000 (debit balance)

Prepare the journal entry to record bad debt expense if the company estimates it to be 3% of receivables. Now assume the company determines that $3,000 will never be received. Prepare the journal entry to record the write-off. What is the net amount expected to be collected of the receivables after the write-off?

Question 3 - Company Z factors $200,000 of accounts receivable with Company A. The finance charge is 2% of accounts receivable. Company A retains an amount equal to 3% of accounts receivable. Record the journal entries for both Company Z and Company A if the sale was on a (1) without recourse basis and again on a (2) with recourse basis. Assume that Company Z estimates a recourse obligation with a fair value of $2,000.