The following information was drawn from the accounting records of Chapin Company. 1. On January 1, Year

Question:

The following information was drawn from the accounting records of Chapin Company.
1. On January 1, Year 1, Chapin paid $56,000 cash to purchase a truck. The truck had a five-year useful life and a $6,000 salvage value.
2. As of December 31, Year 1, Chapin Company had a $68,000 balance in its Accounts Receivable account and a zero balance in its Allowance for Doubtful Accounts account. Sales on account for Year 1 amounted to $320,000. Chapin estimates that 5 percent of credit sales will be uncollectible.

Required
a. Record the year-end adjusting entry for depreciation expense on the truck in T-accounts.
b. Determine the book value of the truck that will appear on the December 31, Year 1, balance sheet.
c. Record the year-end adjusting entry of uncollectible accounts expense.
d. Determine the net realizable value of receivables that will appear on the December 31, Year 1, balance sheet.

Salvage Value
Salvage value is the estimated book value of an asset after depreciation is complete, based on what a company expects to receive in exchange for the asset at the end of its useful life. As such, an asset’s estimated salvage value is an important... Accounts Receivable
Accounts receivables are debts owed to your company, usually from sales on credit. Accounts receivable is business asset, the sum of the money owed to you by customers who haven’t paid.The standard procedure in business-to-business sales is that...

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