Chapter 7, Problem 4EYCT

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SUBJECT: GENERAL ACCOUNTING

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On January 3, 2020, Salma Industries acquired equipment for $420,000. The estimated useful life of the equipment is 6 years or 100,000 machine hours, with a residual value of $30,000. What is the book value of the asset on December 31, 2021, if Salma Industries uses the straight-line method of depreciation?

Willow & Sons Ltd. has $312,000 in accounts receivable on February 1. Budgeted sales for February are $820,000. Willow & Sons expects to sell 25% of its merchandise for cash. Of the remaining 75% of sales on account, 60% are expected to be collected in the month of sale and the remainder the following month. What are the February cash collections from sales? Provide answer

Crescent Corp. sells merchandise to Primex Ltd. for $9,800 with credit terms of 2/10, net 30. Primex returns $1,500 worth of merchandise due to defects and sends a check within the discount period. What is the amount of the check?