I. James Corp. leased office space from Leaseco Inc. for a seven-year period beginning January 1, 20X2. Lindley Corp. invested $84,000 in improvements to the leased property. These improvements have an estimated useful service life of 10 years. As of January 1, 20X5, what was the book or carrying value of the leasehold improvements on James Corp.s books?

a. $84,000 since no amortization is required. b. $58,800. c. $48,000. d. $0 since the improvement costs should have been expensed immediately when they were incurred.

II. ABC Co. purchased land for $150,000. Before the land could be used for its intended business purpose, ABC Co. paid the following costs: $7,000 for realtor fees associated with the purchase; $1,000 for accrued real estate taxes through ABC Co.s acquisition date; and $20,000 to remove an old structure and grade and clear the land. At what amount should the land be recorded on ABC Co.s books?

a. $150,000. b. $157,000. c. $158,000. d. $178,000.

III. Fox Retail Company uses the allowance method (balance sheet approach) to determine bad debt expense. By aging its accounts receivable, Fox has determined that the estimated portion of total accounts receivable of $8,000,000 that are uncollectible totals $120,000. The unadjusted balance in the allowance for uncollectible accounts is a credit balance of $8,000. What entry is needed to record bad debt expense?