XYZ Enterprises purchased equipment for $140,000 on July 1, 2013. The equipment
ID: 2586278 • Letter: X
Question
XYZ Enterprises purchased equipment for $140,000 on July 1, 2013. The equipment is expected to have a four-year life and a residual value of $20,000. Using the sum-of-years'-digits method, the net book value of XYZ’s equipment on December 31, 2014, would be (omit $ and , in the answer):
In March 2015, XYZ Corp. purchased an item of inventory for $30. By June, that item could be purchased for $26 and re-sold for $31. XYZ’s normal profit for the item is $4. At what amount should XYZ report the item in its June 30 balance sheet? XYZ uses the LIFO inventory cost flow assumption. (omit , and $ in the answer)
At the end of the fourth quarter (Q4), XYZ had $80,000 in accounts receivable outstanding. However, based on past experience, it only expected to collect $72,000 in cash from those receivables. XYZ began Q4 with an allowance for doubtful accounts balance of $7,000 and during the quarter wrote off $2,000 in accounts that it determined to be uncollectable. How much Bad Debt Expense should XYZ report in its Q4 income statement? (just enter numbers--no symbols like $ or ,)
Explanation / Answer
Sum of years digits : 1+2+3+4 = 10
Deperciable base = 140000-20000 = 120000
31.12.2013 : Dep = 120000*4/10*6/12= 24000
book value = 140000-24000 = 116000
31.12.2014 : Dep = 120000*3/10=36000
Book value = 116000-36000 = 80000
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