Question
. 20. Everett Company owns equipment that cost $88,000 when purchased on January 1, 2015. It has been depreciated using the straight-line method based on
. 20. Everett Company owns equipment that cost $88,000 when purchased on January 1, 2015. It has been depreciated using the straight-line method based on estimated salvage value of $8,000 and an estimated useful life of 10 years. The company has a calendar year end.
Prepare Everett Company's journal entries to (1) update depreciation to the date of sale, and (2) record the sale of the equipment in these two independent situations.
- Sold for $56,000 on April 1, 2019.
- Sold for $22,000 on October 1, 2019.
21.Cross Company uses the allowance method in accounting for uncollectible accounts. It began 2019 with a $12,500 debit balance in Accounts Receivable, and a $500 credit balance in Allowance for Doubtful Accounts.
(a) Prepare the necessary journal entries to record the selected transactions for Cross Company:
Jul. 15 Determined that the account of Steve Young for $150 is uncollectible.
Aug. 8 Received a check for $150 as payment on account from Steve Young, whose account had previously been written off as uncollectible.
- At December 31, 2019, the balance in Accounts Receivable is $18,700 (debit) and the balance in Allowance for Doubtful Accounts is $180 (credit). Prepare the adjusting entry to record bad debt expense for the year if the credit manager determines that 3% of Accounts Receivable will become uncollectible.
- Repeat part (b), but assume instead that the balance in Allowance for Doubtful Accounts is $220 (debit).
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