Answer:
$140
Explanation:
Calculation for What is the least amount the government can spend to overcome the $350 billion gap
First step is to find the Multiplier using this formula
Multiplier=1(1-Marginal propensity)
Let plug in the formula
Multiplier=1/(1-0.6)
Multiplier=1/0.4
Multiplier=2.5
Now let calculate the least amount the government can spend using this formula
Least amount=Gap/Multiplier
Let plug in the formula
Least amount=$350 billion /2.5
Least amount=$140
Therefore the least amount the government can spend to overcome the $350 billion gap is $140
Risk is the major factor to consider when deciding the funding, when funds are provided it is a risk that whether the funds will be received or not.
<h3>What is Risk?</h3>
Risk is the threat of being unable to receive the funds back, this is the highest level of risk, there are many small risks too, but the highest level is losing the money.
There could be a small portion of loss of money or sometimes the debtor completely defaults so not a single penny is retrieved.
Funding is a choice and the debtor should be chose according to the risk appetite of the investor or lender on money.
There are investors who are risk averse are not willing to take the risk and fine with the less amount of returns and there are risk takers, who want high returns in return of high risk of defaulting.
Learn more about Risk at brainly.com/question/27331968#SPJ1
Journal entries
Dr Allowance for uncollectible account $41,000
Cr Account Receivable $41,000
Dr Account receivable $3,600
Cr Allowance for uncollectible account $3,600
Dr Cash $3,600
Cr Account receivable $3,600
Answer:
The bad debts expense for 2015 would be $ 28,000
Explanation:
The balance of the allowance for doubtful account should be equal to the amount estimated to be uncollectible based on the ageing analysis
Estimated uncollectible account $ 31,000
Allowance for doubtful accounts prior to adjustment <u>$ 3,000</u>
Bad debts expense for the year to be recorded <u> $ 28,000</u>
The accounting entry to record this is as follows:
Bad debts expense Debit $ 28,000
Allowance for uncollectible accounts Credit $ 28,000
