Explanation:
The journal entries are as follows
On December 31
Bad debt expense Dr $4,115 ($823,000 × 0.50%)
To Allowance for doubtful debts $4,115
(Being the bad debt expense is recorded)
On Feb 01
Allowance for doubtful debts Dr $412
To Account receivable $412
(Being the uncollectible amount is recorded)
On June 5
Account receivable $412
To Allowance for doubtful debts Dr $412
(Being the uncollectible amount is recorded)
On June 5
Cash Dr $412
To Account receivable $412
(Being the cash received is recorded)
This example illustrates INSIGHT. A person is said to have an insight when a solution to a problem present itself to him or occur to him suddenly. Insight refers to the sudden discovery of a perfect solution after trying unsuccessfully to fix a problem.
The arbitrage profit implied by these prices is $5.24.
<h3>Arbitrage profit</h3>
Given:
Future contract= 1645
Sport gold price = 1592
Risk-free rate (rf) = .03
Hence:
Arbitrage profit=1645-[1592(1+1.03)¹]
Arbitrage profit=1645- 1639.76
Arbitrage profit=1645 =$5.24
Therefore the arbitrage profit implied by these prices is $5.24.
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So what is the question? This is just a statement.