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3. Spring Company, a traditional department store that has just started to run an online website in an effort to remain competitive in the retail industry, purchased a delivery truck at a cash price of $25,000. Related expenditures included sales taxes applicable at 10% of the purchase price, painting and lettering of $500, and a 3-year accident insurance policy of $2,000.

a. Please compute the cost of the delivery truck. _________

2. Winter Companys balance sheet at December 31, 2019, reported the following:

Accounts Receivable $60,000 Less: Allowance for bad debts 2,000

The business has the following transactions related to credit sales and accounts receivables in 2020.

- Total credit sales for 2020 were $80,000.

- The business received cash payments on account of $74,300 during 2020.

- Accounts receivable identified to be uncollectible totaled $2,700.

a) 3% of credit sales, that is $2,400, were estimated to be uncollectible. Record the adjusting entry at December 31, 2020, to recognize bad debts expense.

b) Then post to the Bad Debts Expense and Allowance for Doubtful Accounts T-accounts, and show their balances after posting.

3. Latte Inc. purchased a coffee drink machine on January 1, 2018, for $44,000. Expected useful life is 10 years or 100,000 drinks. In 2019, 3,000 drinks were sold, and in 2020, 14,000 drinks were sold. Residual value is $4,000.

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