Assorted Accounting Principles

Assorted problems for accounting

1. On January 1, 2007, Accounts receivable and the allowance for doubtful accounts carried balances of $30,000 and $500, respectively. During the year the company reported $70,000 of credit sales. There was $550 of receivables written-off as uncollectible in 2007. Cash collections of receivables amounted to $74,550. The company estimates that it will be unable to collect one percent (1%) of credit sales.

What would be the net realizable value of receivables appearing on the 2007 balance sheet will amount to:

2. Carter Company paid $375,000 for a basket purchase that included office furniture, a building and land. An appraiser provided the following estimates of the market values of the assets if they had been purchased separately:

Office furniture - $75,000; building - $320,000, land - $36,000.

Based on this information the amount of cost that would be allocated to the office furniture is:

3. On January 1, 2008 the Dakota Company barrowed $162,000 cash from the First Trust Bank by issuing a five-year 8% term note. The principal and interest are repaid by making annual payments beginning on December 31, 2008. The annual payment on the loan based on the present value of annuity factor would be $40,575.

How does the amortization of the principal balance on an installment note payable affect the amount of interest expenses recorded each succeeding year?

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5. March Company issued at 97 bonds with a face value of $500,000. As a result of the issue:

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7. Johnson Company issued bonds with a $100,000 face value on January 1, 2008. The five-year term bonds were issued at 7% stated rate of interest that is payable in cash on December 31st of each year. Based on this information:

The amount of interest expense shown on Johnson's December 31, 2008 income statement would be:

8. Long Co. paid $175,000 for a purchase that included land, building, and office furniture. An appraiser provided for the following estimates of the market values of the assets if they had been purchase separately: Land, $20,000, Building, $150,000, and Office Furniture, $30,000. Based on this information the cost that would be allocated on the land is:

9. Baker Co. had sales of $300,000 in 2009. The company expects to incur warranty expenses amounting to 3% of sales. There was $6,000 of warranty obligations paid in cash during 2009, Based on the information:

10. On January 1, 2005, Lawrence Company purchased as asset that cost $10,000. The asset has an expected useful life of five years and an estimate salvage value of $2,000. Lawrence uses the straight-line method for the recognition of depreciation expense. At the beginning of the fourth year of usage, the company revised its estimate salvage value of $1,000.

Based on the information, the amount of depreciation expense to be recognized at the end of 2009 is:

11. Warren Company issued bonds with a face value of $800,000, a 12% stated rate of interest, and a 10-year term. The bonds were issued on January 1, 2008. Interest is paid annually on December 31.

Assuming Warren issued the bonds for 105, the carrying value of the bonds on the 12/31/08 balance sheet would be:

12. What is the name used for the type of secured bond that requires a pledge of a designated piece of property in case of default?