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Current Asset calculation for Trent Corp.

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Trent Corp.'s trial balance reflected the following account balances at December 31, 2004:

Accounts receivable (net) ----------------------------------- $19,000
Trading securities ------------------------------------------ 6,000
Accumulated depreciation on equipment and furniture --------- 15,000
Cash -------------------------------------------------------- 11,000
Inventory --------------------------------------------------- 30,000
Equipment --------------------------------------------------- 25,000
Patent ------------------------------------------------------ 4,000
Prepaid expenses -------------------------------------------- 2,000
Land held for future business site -------------------------- 18,000

In Trent's December 31, 2004 balance sheet, the current asset total is
a. $85,000
b. $77,000
c. $72,000
d. $68,000

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Solution Preview

Following are the current assets:
Accounts receivable (net) ----------------------------------- $19,000 ...

Solution Summary

Answers a conceptual question on current asset calculation.

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Problem 42, 43, and 44

42. Information concerning the exchange of assets with Myers Equipment by two companies is as following:
Cox Troy
Company Company
Cost $32,000 $25,000
Accumulated depreciation 12,000 13,000
Fair market of old equipment 21,000 10,000
Cash paid 6,000 14,000

Journalize the exchange on the books of (1) Cox and (2) Troy, assuming similar assets were obtained in the exchange.

Final Exam--Page 9

Explanation Post. Ref.

43. (a) Zinn Company purchased equipment in 1994 for $60,000 and estimated a $6,000 salvage value at the end of the equipment's 10-year useful life. At December 31, 2000, there was $37,800 in the Accumulated Depreciation account for this equipment using the straight-line method of depreciation. On March 31, 2001, the equipment was sold for $16,000

Prepare the appropriate journal entries to remove the equipment from the books of Zinn Company on March 31, 2001.

Explanation Post. Ref.

(b) Herbert Company sold a delivery truck for $16,000. The delivery truck originally cost $30,000 in 1997 and $6,000 was spent on a major overhaul in 2000 (charged to Delivery Truck account). Accumulated Depreciation on the delivery truck to the date of disposal was $20,000.

Prepare the appropriate journal entry to record the disposition of the delivery truck.

Final Exam--Page 10

Explanation Post. Ref.

(c) Dolan Company sold office equipment that had a book value of $6,000 for $8,000. The office equipment originally cost $20,000 and it is estimated that it would cost $25,000 to replace the office equipment.

Prepare the appropriate journal entry to record the disposition of the office equipment.

Explanation Post. Ref.

44. The Eller Sign Company uses the allowance method in accounting for uncollectible accounts. Past experience indicates that 1.5% of net credit sales will eventually be uncollectible. Selected account balances at December 31, 2000, and December 31, 2001, appear below:

12/31/00 12/31/01
Net Credit Sales $400,000 $600,000
Accounts Receivable 75,000 100,000
Allowance for Doubtful Accounts 5,000 ?

a. Record the following events in 2001.
Final Exam--Page 11

Aug. 10 Determined that the account of Barb Kern for $1,000 is uncollectible.

Sept. 12 Determined that the account of Jim Mann for $3,00 is uncollectible.

Oct. 10 Received a check for $550 as payment on account from Barb Kern, whose account had previously been written off as uncollectible. She indicated the remainder of her account would be paid in November.
Nov. 15 Received a check for $450 from Barb Kern as payment on her account.

b. Prepare the adjusting journal entry to record the bad debt provision for the year ended December 31, 2001.

c. What is the balance of Allowance for Doubtful Accounts at December 31, 2001.

Explanation Post. Ref.

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