Question

Donovan Co. uses the aging method to allow for uncollectible accounts. Donovan's accountants have estimated that $37,000 of current accounts receivable will eventually become uncollectible. The current balance of the Allowance for Uncollectible Accounts is an $4,000 credit. For what amount should the Allowance account be adjusted this period?

		a. $41,000
		b. $37,000
		c. $34,000
		d. $33,000

27. James Co. is a brand new corporation that has not yet issued any stock. The corporation has approved the issuance of 2,500 shares of stock with a $2 par value to Tom Mills in exchange for land appraised at $45,000. Upon acquiring the land, James Co.'s land account should be debited for:

		a. $40,000
		b. $45,000
		c. $35,000
		d. $5,000

28. A truck was purchased for $25,000. It had a five-year life and a $4,000 residual value. Under the straight-line method, depreciation expense each year is

		a. $4,000
		b. $5,000
		c. $4,200
		d. $2,000

Generally accepted accounting principles encompass the conventions, rules and procedures necessary to define accepted accounting practice at a particular time.

		a. True
		b. False

Answer 1

Q1.
Answer is d. $33,000
Explanation:
Required balance of Allowance	37000
Less: Credit balance of Allowance	4000
Bad debts expense		33000
Q27.
Answer is b. $ 45,000
Land is recorded at a appraised value of land when it is determined.
Q28.
Answer is c. $ 4200.
Cost of Truck	25000
Less: Salvage	4000
Depreciable cost	21000
Divide: Life	5
Annual depreciation	4,200
Q29.
Answer is b. FALSE
The principles of accounting is applicable at all the times whenver the activity of accounting is taken.