Question
1. On December 31, 20X1 Morgan reported an Accounts receivable balance of $200,000 and an Allowance for doubtful accounts balance of $3,000. During January of
1. On December 31, 20X1 Morgan reported an Accounts receivable balance of $200,000 and an Allowance for doubtful accounts balance of $3,000. During January of 20X2, Morgan wrote off an account balance of $500. Assuming no other activity, what is the net realizable value of accounts receivable after the write-off? a. $199,500 b. $196,500 c. $200,000 d. $197,000
2. Martin purchased machinery on January 1, 1999 for $80,000. The machinery was expected to have a useful life of 5 years and a salvage value of $20,000. Straight line depreciation was recorded on December 31, 1999 and December 31, 2000. On December 31, 2001, Martin had the machinery appraised, and the appraisal value was determined to be $70,000. What should Martin do on December 31, 2001? a. Record depreciation expense of $12,000 b. Record depreciation expense of $16,667 c. Record depreciation expense of $18,667 d. Record no depreciation expense for 2001
3. On May 1, 2001 Maymont Company acquired a new machine for $100,000. Its estimated useful life is five years and its estimated residual value is $10,000. Assuming straight-line depreciation is used, how much depreciation expense should be recorded on December 31, 2001? a. $18,000 b. $20,000 c. $10,500 d. $12,000 e. None of the above
4. On January 1, 1998, Grabill, Inc. purchased a new machine for $60,000. Its estimated useful life is eight years with an expected salvage value of $6,000. Assuming double declining-balance depreciation, depreciation expense for 1999 is: a. $15,000 b. $10,125 c. $11,250 d. $13,500 e. None of these.
5. On July 1, 2002 Bartlett Company sold some used equipment for $28,000. The equipment had been purchased several years ago for $60,000. Bartlett recorded a $6,000 gain on the sale. The accumulated depreciation on the equipment at the date of sale must have been: a. $32,000 b. $34,000 c. $38,000 d. $22,000 e. None of the above.
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