Answer:
a. Journal entries to record the reinstatement of the account receivable
Account Title and Description Debit Credit
Account receivable account $600
Allowance for Doubtful Accounts account $600
(Reinstatement of the account receivable)
b. Journal entries to record the receipt of cash
Account Title and Description Debit Credit
Bank Account $600
Account receivable account $600
(Receipt of cash)
Answer:
We will not hire a security guard.
Explanation:
Data provided
Merchandise stolen cost of every hour = $25
Hourly market wage for a security guard = $33
According to the given situation, The hourly loss is $25, and the hourly cost is $33, even if the shopkeeper keeps a security guard, then the cost per hour is $33, so the store loss increases by $33 - $25 = $8, so we will not hire the security guard to maximize the profit.
