Homework Answers
1) Accounts receivable account...Debit $6,120
To notes receivable account.......Credit $6,000
To Interest receivable account......Credit $120
2) Depreciation expense = (cost - residual value) / useful life
= ($120,000 - $10,000) / 10 = $11,000
Book value at the end of 2nd year = $120,000 - (11,000 *2) = $98,000
In the beginning of 3rd year asset has been revalued and estimated that its useful life was only 4 years
Depreciation expense (3rd year) = ($98,000 - $2,000) / 4 = $24,000
So, $24,000 is right answer
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