10 38. Equipment was purchased for $68,000 om January 1, 2013. Freight charges a

Question

10 38. Equipment was purchased for $68,000 om January 1, 2013. Freight charges amounted to there was a cost of $8,000 for building a foundation and installing the equipment. It is $2,800 and the equipment will have a $12,000 salvage value at the end of its S-year useful life. What is the amount of accumulated depreciation at December 31,2014, if the straight-line method of depreciation is used A. $26,720. B. $13,360. C. $11,440. D. $22,880. E. None of the above 39. An analysis and aging of the accounts receivable of Watts Company at December 31 reveal these data: $ 4,400,000 450,000 600,000 What is the cash realizable value of the accounts receivable at December 31 after adjustment? Accounts receivable Allowance for doubtful accounts per books before adjustment (credit) Amounts expected to become uncollectible D. E. $3,800,000 None of the above. A. $3,950,000 B. $4,850,000 C. $5,000,000 Grand Furniture Company factors $5,500,000 of receivables to Quick Loan Factors, Inc. Quick Loan Factors assesses a 4% service charge on the amount of receivables sold. Grand Furniture Company factors its receivables regularly with Quick Loan Factors. What journal entry does Gipson make when factoring these receivables? A. Cash 40. 5,280,000 Loss on Sale of Receivables 220,000 Accounts Receivable 5,500,000 B. Cash 5,280,000 Accounts Receivable 5,280,000 C. Cash 5,500,000 Accounts Receivable Gain on Sale of Receivables 5,280,000 220,000 D. Cash 5,280,000 220,000 Service Charge Expense Accounts Receivable 5,500,000 E. None of the above.

Explanation / Answer

38 Purchase Date Jan 1 2013 Purchase Cost 68000 Frieght Cost 2800 Building & Installation 8000 Total Capitalized Value 78800 Less: Residual Value 12000 Net Depreciable Value 66800 Life 5 Annual Depreciation PA 13360 Depreciation for 2013 13360 Depreciation for 2014 13360 Total Accumlated Dep at end of 2014 26720 Answer is A 39 Account Recievable 4400000 Allowance for Bad Debt 450000 Total Amount Expected to become Uncollectable 600000 Revised Allowance for Bad Debt Provision Account 600000 (150000 Charged to PL) Account Recievable 4400000 Less: Allowance for Bad Debt Provision 600000 Cash Realizable Value As at 31 Dec 3800000 Answer is B 40 Account Recievable 5500000 Commision for Factoring 4% Commision for Factoring in Value 220000 Journal Entry for Recording: Cash Account Dr. 5280000 Service Charge Expense Dr. 220000 To Account Recievable 5500000 Answer is D

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