Cheswick Corp -Refer to the Data for Cheswick Corp

question 103

Essay

Cheswick Corp.
The following information is for Cheswick Corp. at the end of 2017:
$\begin{array} { l r } \text { Sales } & \$ 800,000 \\\text { Sales returns and allowances } & 8,000 \\\text { Accounts receivable-December 31, 2017 } & 175,000 \\\text { Allowance for doubtful accounts-December 31, 2017 } & \\\quad \text { (Credit balance) (before adjustment for bad debts) } & 1,000 \\\text { Estimated uncollectible accounts } & \\\quad \text { (Per aging schedule at December 31, 2017) } & 7,500\end{array}$
-Refer to the data for Cheswick Corp..
Determine the effect on Cheswick Corp.' accounting equation of the year-end adjustment of bad debts using the aging approach.

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Definitions:

Actuarially Determined

Calculated using actuaries' methods and assumptions, typically in the context of pension plans and insurance.

Discount Rate

The interest rate used in discounted cash flow (DCF) analysis to determine the present value of future cash flows or investments.

Pension Plan

A retirement plan that requires an employer to make contributions into a pool of funds set aside for a worker's future benefit.

Cumulative Unrecognized Loss

Losses that have not been realized through a transaction and are not reflected in financial statements, often relating to investments or assets held.