Fife Company Has the Following Account Balances at December 31

question 133

Essay

Fife Company has the following account balances at December 31 of the current year: Accounts Receivable $42,400 and Allowance for Doubtful Accounts $1,600 (credit balance).Fife uses the aging of accounts receivable to estimate bad debts.The following aging schedule reflects the situation at year-end: (1)Calculate the amount of the Allowance for Doubtful Accounts that should appear on the December 31,current year,balance sheet.
(2)Prepare the journal entry to record bad debts expense for the current year.

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Definitions:

Semiannual Payments

Payments that are made twice a year, often encountered in the context of loan repayments or bond interest payments.

Compounded Semiannually

Compounded semiannually refers to the process of applying interest to an initial amount and the accumulated interest over two periods within a year.

Future Value

The value of an investment at a specific date in the future, considering the interest rate or rate of return it earns over time.

Number of Periods

In finance, it refers to the total duration, measured in time units (such as years or months), over which payments or calculations are spread.