Madson Company is analyzing several proposed investment projects The firm has resources only for one project Project P Project Q

Response:

advertising expense 387 debit

prepaid expense 387 credit

--to document expired advertising at the year's end ---

Details:

1,548 represents the value over 36 months

From April to December 31, 9 months have elapsed thus:

1,548 x 9/36 = 387 expired advertising

We will reduce our prepaid account and record the advertising expense for the expired amount

The prepaid expense is classified as an asset since it grants us the right to receive advertising for our product and brand during the contract period. Therefore, we credit it to decrease it

while the expense will debit our equity

Answer:

Explanation:

Accounts receivable of 320,000 debit

Allowance                    600 credit

Sales total 900,000

1% estimated uncollectible:

900,000 x 1% = 9,000

The necessary adjusting entry will be for 9,000

As the calculated allowance corresponds to the sales of this period, we anticipate that 9,000 will be uncollectible in the upcoming period. It’s essential to acknowledge the entire sum now; otherwise, in a future period, we will incur bad debt expense for this previous period.

Recognizing the full amount aligns with the sales period, accommodating for any future uncollectible amounts arising from these sales

A federally insured account has several benefits:

- It is typically more secure due to government-backed insurance; if the account is compromised, the government guarantees reimbursement.

- Creating a joint account is simpler for married couples.

However, there are some downsides:

- The interest rates on these accounts often lag behind inflation, which essentially diminishes the account’s value over time.

- There is a cap of $250,000, meaning any amount above this limit cannot be added to the account.