Fred came to you and wanted to know why the land across the street that was purchased in 2020 could not be recorded at the estimated fair value of $800,000. "Since we purchased that land, prices have skyrocketed in the area. Just yesterday, I had a call from a casino developer asking if they could buy it for $780,000. I think we could easily get $800,000 for it, but Sam doesn't want to sell it. I think we should record it at what we could get for it. What do you think?" During 2020, Fred worked hard to attract new business. In November, he managed to sign a contract with Simcoe Toys (ST) that would see MI selling 500,000 kg of recycled plastic to ST over the next two years at a price of $2 per kilogram. Fred is quite excited about the contract and the fact that ST paid $200,000 in advance of the start of production. The amount was received December 1, 2020. As of December 31, 2020, MI had produced and delivered 50,000 kg of recycled plastic to ST. You noted to Fred that it appears that the $200,000 deposit was recorded as revenue. Fred has asked you if there is anything wrong with that entry. If there is, he would like to know why and for you to make any correcting entry that you feel is appropriate. MI sells to many customers on credit. MI employs a credit manager who reviews a client's financial history prior to allowing them to buy on credit. It is MI's policy to use the allowance for doubtful accounts method based upon the aging of receivables. The balance is adjusted yearly after taking into account any adjustments for customers' accounts written off. A snapshot of MI's current accounts receivable balance at year end shows that it has a balance of $529,200 with an allowance for doubtful accounts debit balance of $6,000. (Note that this is prior to any adjusting journal entries that you would make.) A more detailed breakdown of the accounts receivable balance shows the following amounts aged: 0-30 days: $280,000 31-60 days: $ 155,000 61-90 days: $ 75,600 Greater than 90 days: $ 18,600 You note that included in the above aged balances is an amount of $30,000 from a customer, Cutthroat Kitchens. This customer went bankrupt in November 2020, and there is no possibility of receiving payment from it. Fred doesn't know what to do with this amount but knows that you will. It is standard MI policy that 2% of receivables from 0 to 30 days will ultimately be uncollectible, 4% for 31-60 days, 20% for 61-90 days, and 80% greater than 90 days will be uncollectible. This policy is implemented after adjusting for any amounts at year end that will definitely not be collected. In January, MI decided to stop using a significant piece of manufacturing equipment. The equipment, purchased in 2018, is still quite useful because it can be retrofitted to produce many different items, but it no longer fits within MI's strategic plan. Details of the disposal are as follows: Year Cost 2018 2019 2020 $750,000 $750,000 $750,000 Accumulated depreciation (25,000) (50,000) (75,000) Net book value $725,000 $700,000 $675,000 According to the board of directors' meeting minutes, while management of MI intends to sell the machinery because it is only three years old and still has considerable life, the company may continue to use it to produce some units until a buyer is found. Management is responsible for these asset disposal decisions. Assets can be ready within 30 days' notice, and the marketing department has begun advertising on local websites in order to sell the equipment.