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w06_MT2_136a2

# w06_MT2_136a2 - March 6 2006 Anderson ECON 136A 11AM...

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Midterm #2--Page 2 5. If the estimate of uncollectibles is made by taking 1% of net sales, the amount of the adjustment is a. \$4,000. b. \$4,111. c. \$4,250. d. None of the above 6. On December 31, 2004, Eller Corporation sold for \$50,000 an old machine having an original cost of \$90,000 and a book value of \$40,000. The terms of the sale were as follows: \$10,000 down payment \$20,000 payable on December 31 each of the next two years The agreement of sale made no mention of interest; however, 9% would be a fair rate for this type of transaction. What should be the amount of the notes receivable net of the unamortized discount on December 31, 2004 rounded to the nearest dollar? (The present value of an ordinary annuity of 1 at 9% for 2 years is 1.75911.) a. \$35,182. b. \$45,182. c. \$40,000. d. \$70,364. 7. The cash account shows a balance of \$38,000 before reconciliation. The bank statement does not include a deposit of \$2,300 made on the last day of the month. The bank statement shows a collection by the bank of \$940 and a customer's check for \$220 was returned because it was NSF. A customer's check for \$450 was recorded on the books as \$540, and a check written for \$79 was recorded as \$97. The correct balance in the cash account was a. \$38,612. b. \$38,648.
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w06_MT2_136a2 - March 6 2006 Anderson ECON 136A 11AM...

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