35.

Use the information below for the following two questions

On January 1,2019, Aguero Corp. accepted a 5 percent 3-year $800,000 note from Ramos Corp, in exchange for a service it provided to Ramos. The effective yield for such a note is 8 percent, Ramos will make annual interest payments starting on December 31,2019, and the principal will be paid at the end of the third year. After making the first payment in full, Ramos began to experience financial difficulties. On January 1, 2020, Aguero estimates that it will only collect 70% of each of the remaining interest payments and 80% of the principal due at maturity.

	5 percent	8 percent
Present Value of 1 (2 periods)	0.90703	0.85734
Present Value of 1 (3 periods)	0.86384	0.79383
Present Value of an Ordinary Annuity of 1 (2 periods)	1.85941	1.78326
Present Value of an Ordinary Annuity of 1 (3 periods)	2.72325	2.57710

Assuming Aguero made all required journal entries through 12/31/2019, how much bad debt expense should Aguero record on January 1,2020?

(1) $158,571 (2) $171,371 (3) $213,719 (4) $238,148

36.

Assuming Aguero mde all required journal entries through 12/31/2019, which of the following is/are correct regarding the effect of the entry on January 1 ,2020?

(1) Reduces gross receivables

(2) Reduces net receivables

(3) Does not affect total assets

(4) Increases net receivables

ans: ?

A: (1),(3)

B: (2) only

C:(2),(4)

D:(1) only

39.

On January 1,2017, Services Inc. accepted a $50,000 down payment and $100,000 zero-interest-bearing note due on December 31, 2019 in exchange for services rendered. An appropriate interest rate was 5%. What amount of service revenue and interest revenue should Services Inc. recognize in 2017? [Use the present value table in 35.(look top)]

(1) Service Revenue - 86,385 : Interest Revenue - 4,319

(2) Service Revenue - 136,384: Interest Revenue - 4,319

(3) Service Revenue - 150,000 : Interest Revenue - 6,819

(4) Service Revenue - 100,000 : Interest Revenue - 6,819