orrower Co. $20,000 on September 1, accepting a five-month, 9% interest note. If

Question

orrower Co. $20,000 on September 1, accepting a five-month, 9% interest note. If Lender Corp. presents the note to Borrower Co. on February 1, the maturity date, Lender Corp's entry to record the collection includes 3. Lender Corp. lends B a. A credit to Interest Receivable of $600 b. A debit to Interest Revenue of $150 c. A debit to Cash of $20,000 d. A debit to Interest Revenue of $750 e. A debit to Notes Receivable of $20,000 4. Allowance for Doubtful Accounts is a. the value an asset has lost over time. an expense. c. an asset. d. a temporary account e. a contra asset b. 5. Climate Co. purchases equipment on July 1, 2017 for $102.000. The estimated useful life is ten years and 100,000 machin hours. The estimated salvage value of the equipment is $2.000. The company uses the straight-line depreciation method. Calculate the depreciation expense to be recorded in an adjusting journal entry on December 31, 2017 a. $9.600 b. $10,000 c. $10,400 d. $20,000 e. None of these D6. What is the normal balance of the Allowance for Doubtful Accounts? cannot be determined c. d. slightly to the left e. It is unbalanced. declining balance method is the most commonly used depreciation method in US companies.

Explanation / Answer

Answers:

3.c. debit to cash $ 20000

Cash a/c      Dr.20750

          To Note Receivable 20000

          To Interest Revenue 750

4.a contra asset

5.Depreciation expense = 102000 - 2000 / 10 = 10000

6.b. credit

Bad debts a/c         Dr.

       To Allowance for doubtful accounts

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