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 .