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A company that uses the allowance method to account for its bad debts had credit sales of $740,000 in 2010,including a $720 sale to Linda Paul.On December 31,2010,the company estimated its bad debts at 1.5% of its credit sales.On June 1,2011,the company wrote off as uncollectible the $720 account of Linda Paul; and on December 21,2008 Linda Paul unexpectedly paid her account in full.Prepare the necessary journal entries (a)on December 31,2010,to reflect the estimate of bad debts expense; (b)on June 1,2011,to write off the bad debt; and (c)on December 21,2011,to record the unexpected collection.
Absolute Purchasing Power Parity
The theory that exchange rates between currencies are in equilibrium when their purchasing power is the same in each of the two countries.
Exchange Rate
The price of one country's currency in terms of another currency.
Mexican Pesos
The official currency of Mexico, symbolized as $ or MXN in the financial markets.
Political Risk
The risk associated with changes in government policy or political instability that can affect investments in a particular country.
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