Question

# 3. (5 points) During 2020, Larsen Company's accounts receivable averaged \$750,000. Larsen's 2020 income statement reported net sales of \$6,780,000, uncollectible accounts expense of \$160,000, and net income of \$768,000. (Assume

365 days in a year.) Using the information, above compute the following for Larsen Company: (a.) Accounts receivable turnover: (Round to the nearest two decimals) (b.) Average number of days to collect accounts receivable (Round to nearest day) 5. (35 points total) Depreciation in financial statements (a.) (15 points) Dynasty Co. uses straight-line depreciation in its financial statements, with depreciation for a partial year rounded to the nearest full month. On September 28, 2018 Dynasty purchased equipment at a cost of \$140,000. For financial reporting purposes, the useful life of this equipment was estimated at 5 years, with a \$30,000 salvage value. Calculate the depreciation expense relating to this equipment that Dynasty will recognize in its financial statements in the following years. If no depreciation will be recognized in a particular year, write zero. (b.) Domino, Inc uses straight-line depreciation with a half-year convention in its financial statements. On March 10, 2018, Domino acquired a computer system at a cost of \$98,800. Estimated useful life is six years, with residual value of \$5,200. 1) (15.75 points) Complete the following schedule, showing depreciation expense Domino expects to recognize each year in the financial statements. 2) (4.25 points) Assume Domino sells the computer system on October 3, 2021 for \$26,650 (hint: pay attention to the start month (March) of depreciation & sell date (October)). For financial statement purposes, compute the book value of the computer system at date of disposal and the gain or loss on disposal (indicate gain or loss by circling the correct response). Book value (date of sale): Gain or loss on disposal (please circle your response & provide the dollar amount):