Problem 1: Presented below are two independent situations.
(a) On March 3, Lisa Ceja Appliances sells $700,000 of its receivables to Horatio
Factors Inc Horatio Factors assesses a finance charge of 3% of the amount of receivables sold. Prepare the entry on Lisa Ceja Appliances' books to record the sale of the receivables
(b) On May 10, Worthy Company sold merchandise for $4,000 and accepted the customer's Firstar Bank MasterCard. At the end of the day, the Firstar Bank MasterCard receipts were deposited in the company's bank account. Firstar Bank charges a 4% service charge for credit card sales. Prepare the entry on Worthy Company's books to record the sale of merchandise.
Problem 2: Lindy Rig, the new controller of Bellingham Company, has reviewed the expected use-ful lives and salvage values of selected depreciable assets at the beginning of 2002. Her findings are as follows.
Accumulated Useful Life
Type of Date Depreciation in Years Salvage Value
Asset Acquired Cost 1/1/02 Old Proposed Old Proposed
Building 1/1/96 $800,000 $114,000 40 50 $40,000 $70.000
Warehouse 1/1/99 100,000 11,400 25 20 5,000 3,600
All assets are depreciated by the straight-line method. Bellingham Company uses a calendar year in preparing annual financial statement& After discussion, management has agreed to at-cept Lindy's proposed changes.
Instructions:
(a) Compute the revised annual depreciation on each asset in 2002. (Show computations.)
(b) Prepare the entry (or entries) to record depreciation on the building in 2002.