On December 31, 2010, Flint Corporation sold for $75,000 an old machine having an original cost of
$135,000 and a book value of $60,000. The terms of the sale were as follows:
$15,000 down payment
$30,000 payable on December 31 each of the next two years
The agreement of sale made no mention of interest; however, 9% would be a fair rate for this type of
transaction. What should be the amount of the notes receivable net of the unamortized discount on
December 31, 2010 rounded to the nearest dollar? (The present value of an ordinary annuity of 1 at
9% for 2 years is 1.75911.)
a.
b.
c.
d.
$52,773.
$67,773.
$60,000.
$105,546.
2. Vasguez Corporation had a 1/1/10 balance in the Allowance for Doubtful Accounts of $20,000. During
2010, it wrote off $14,400 of accounts and collected $4,200 on accounts previously written off. The
balance in Accounts Receivable was $400,000 at 1/1 and $480,000 at 12/31. At 12/31/10, Vasguez
estimates that 5% of accounts receivable will prove to be uncollectible. What is Bad Debt Expense for
2010?
a.
b.
c.
d.
$4,000.
$14,200.
$18,400.
$24,000.
6. Foxx Corp.'s comparative balance sheet at December 31, 2011 and 2010 reported accumulated
depreciation balances of $800,000 and $600,000, respectively. Property with a cost of $50,000 and a
carrying amount of $38,000 was the only property sold in 2011. Depreciation charged to operations in
2011 was
a. $188,000.
b. $200,000.
c. $212,000.
d. $224,000.
c