ACC 400 Course Great Wisdom / tutorialrank.com ACC 400 Course Great Wisdom / tutorialrank.com | Page 19

4 . Lexter Company has a balance of $65,000 in Accounts Receivable
and a $5,000 credit balance in Allowance for Doubtful Accounts. If a
specific customer's account with a balance of $500 is written off as
uncollectible, the cash (or net) realizable value of the accounts
receivable will be a. $64,500. b. $60,000. c. $65,500. d. $60,500.

5. Martin Textile purchased machinery for $50,000 eight years ago. It
was expected to have a useful life of ten years, no salvage value, and
was depreciated using the straight-line method. At the end of its
eighth year of use it was retired from service and given to a junk
dealer. The entry to record the retirement includes a a. debit to Loss
on Disposal for $10,000. b. debit to Machinery for $50,000. c. debit to
Depreciation Expense for $10,000. d. credit to Accumulated
Depreciation—Machinery for $40,000.

6. The cost of a patent should be amortized over a. 40 years. b. the
shorter of its legal life or its useful life. c. the longer of its legal life or
its useful life. d. its useful life.

7. On July 1, 2007, Low Enterprises sold equipment with an original
cost of $85,000 for $40,000. The equipment was purchased January 1,
2006, and was depreciated using the straight-line method assuming a
five year useful life and $5,000 salvage value. The necessary entries
for 2007 include a a. debit to Accumulated Depreciation—Equipment
for $16,000. b. credit to Gain on Sale of Equipment for $21,000. c.
credit to Cash for $40,000. d. debit to Depreciation Expense for
$8,000.