Assume that the accounts receivable (in millions) were $1,308 at the beginning of

At year-end (December 31), Chan Company estimates its bad debts as 0.70% of its annual credit sales of $862,000. Chan records it

KiRa [710]

Answer: Please see the required journals below:

December 31:

Debit Bad debt expense $6,034

Credit Allowance for doubtful accounts $6,034

February 1:

Debit Allowance for doubtful accounts $431

Credit Accounts receivables $431

June 5:

Debit Cash $431

Credit Bad debt recovery (income statement) $431

Explanation: The company estimates its bad debt expense as percentage of sales. In this case 0.7% of its annual sales of $862,000 was deemed as uncollectible, that is, 0.7% x $862,000 = $6,034. The required journals to recognize this bad debt expense is provided above. However, since there was an existing provision, which resides in the allowance account, a write-off would definitely hit that account in order to extinguish the accounts receivable portion. Upon recovery of the write-off, we cannot reinstate the receivable since it was already extinguished but we need to recognize the recovery as a gain.

3 0

3 years ago

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What will happen to the current ratio if current assets increase, while everything else remains unchanged?

Nana76 [90]

The current ratio will increase if current assets increase, while everything else remains unchanged.

This is further explained below.

<h3>What is the current ratio?</h3>

Generally, A liquidity ratio that evaluates a company's capacity to pay short-term debts or those that are due within the next year is called the current ratio.

It explains to investors and analysts how a business may get the most out of the current assets that are shown on its balance sheet in order to pay off its current debt and any other payables.

A current asset is defined as any asset that a company can reasonably expect to sell, consume, or deplete through the normal operations of the business inside the current financial year or an operating cycle, or an economic year.

In other words, a current asset is an asset that will be sold, consumed, or exhausted.

In conclusion, If current assets continue to grow while everything else stays the same, the current ratio will continue to show an upward trend.

Read more about current assets

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5 0

1 year ago

How can Carlito determine the total income earned by a person?

photoshop1234 [79]

Answer:

income....

Bank statement

Explanation:

3 0

2 years ago

What role do governments play in the free enterprise system?

Afina-wow [57]

I would think the answer is C.

6 0

2 years ago

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If $3000 is invested at 9% interest, compounded annually, then after n years the investment is worth an = 3000(1.09)n dollars. (

Charra [1.4K]

Answer:

The first five terms of the sequence are:

First year: $3270.00

Second year: $3564.30

Third year: $3885.09

Fourth year: $4234.75

Fifth year: $4615.87

Explanation:

When we're dealing with compound interest rates we're dealing with interests being re-invested into the original investment. This means that the new interests of one period will bear interests in the next period. This can be simply calculated using the compound interest formula.

The formula for compound interest rates is $P(1+i)^{n}$

Where:

<em>P</em> is the principal amount being invested,

<em>i</em> is the interest rate,

<em>n</em> is the number of years.

So for the first year we replace in the formula with the given values:

3000 × $(1.09)^{1}$ = $3270

And for the rest of the years we only need to modify the value of <em>n</em>.

For the second year we'd have:

3000 × $(1.09)^{2}$ = $3564.3

And so on.

4 0

3 years ago