Question

1.) In its December 31, Year 3 balance sheet, Fleet Co. reported accounts receivable of $100,000 before allowance for uncollectible accounts of $10,000. Credit sales during Year 4 were $611,000, and collections from customers, excluding recoveries totaled $591,000. During Year 4, accounts receivable of $45,000 were written off and $17,000 were recovered. Fleet estimated that $15,000 of the accounts receivable at December 31, Year 4 were uncollectible. In its December 31, Year 4, balance sheet what amount should Fleet report as accounts receivable before allowance for doubtful accounts ? A.) B.) $58,000 $67,000 $75,000 $82,000 2.) During the year just ended, Burr Co. had the following transactions pertaining to its new office building: Purchase price of land Legal fees for contracts to purchase land Architects fees Demolition of the old building on site (land costo Sale of scrap from the old building Construction cost of new building (fully completed) 60,000 2,000 8,000 5,000 3,000 350,000 In Burr's December 31 balance sheet, what amounts should be reported as the cost of land and cost of building ? Land Building $60,000 $62,000 $64,000 $65,000 $360,000 $360,000 $358,000 $362,000
please explain and show the process why and why not use the amounts

Answer 1

Solution Question #1 Computation of ending balances in Accounts Receivable and Allowance for Uncollectible Accounts Accounts Receivable (Gross) Allowance for Uncollectible Accounts Accounts Receivable, net Dr. (Cr.) Bal. $100,000 $611,000 ($591,000) ($ 45,000) Dr. (Cr.) Bal.] ($10,000) $ol $0 $45,000 Dr. (Cr.) Bal. $90,000 $611,000 ($591,000) $0 | Beginning Balance (at the beg. of Year 4) Credit sales during year 4 Collection from Accounts receivables Uncollectible Accounts receivables write-offs Reinstate of Accounts Receivables Previously written off Collection from Previously written off Accounts Ending balance (prior to Bad debts expense) Bad debt expense (WN-1) Ending balance (at the end of Year 4) $17,000 ($17,000) $0 ($17,000) $75,000 $0 $75,000 $0 $18,000 ($33,000) ($15,000) ($17,000) $93,000 ($33,000) $60,000 WN-1: Bad debt expense Estimated Uncollectible Accounts at the end of Year 4 Balance in Allowance for Uncollectible accounts prior to bad debts (Dr. bal.) Estimated bad debt expense ($15,000 - $18,000) $15,000 $18,000 $33,000 Accounts Receivables before allowance for doubtful Accounts $75,000 The correct option is, C.) $75,000 Question #2 Computation of cost of land and cost of building Building Land $ 60,000 $2,000 $8,000 Purchase price of land Legal fees for contracts to purchase land Architects fees (note 1) Demolition of the old building on site (note 2) Sale of scrap from the old building (note 3) Construction cost of new building (fully completed) Cost of land and cost of building $5,000 ($3,000) $350,000 $358,000 $64,000 Note 1: Architects fees is paid in relation of building, hence it shall be included in cost of building. Note 2: Cost of demolition of the old building is considered as land improvement cost, and hence it shall be included in cost of land. Note 3: Sale of scrap from the old building is deducted from the cost of land improvement, hence it shall be deducted from the cost of the land. The correct option is, C.) $64,000 (Land) $358,000 (Building)