Mannisto, Inc., uses the FIFO inventory cost flow assumption. In a year of rising costs and prices, the firm reported net income of $1,500,000 and average assets of $10,000,000. If Mannisto had used the LIFO cost flow assumption in the same year, its cost of goods sold would have been $300,000 more than under FIFO, and its average assets would have been $300,000 less than under FIFO.
Required:
a. Calculate the firm's ROI under each cost flow assumption (FIFO and LIFO). (Enter your answers as percentages rounded to 1 decimal place (i.e., 12.2%).)
b. Suppose that two years later costs and prices were falling. Under FIFO, net income and average assets were $1,800,000 and $12,000,000, respectively. If LIFO had been used through the years, inventory values would have been $200,000 less than under FIFO, and current year cost of goods sold would have been $100,000 less than under FIFO. Calculate the firm's ROI under each cost flow assumption (FIFO and LIFO). (Enter your answers as percentages rounded to 1 decimal place (i.e., 12.2%).)
On January 1, 2016, the balance in Kubera Co.'s Allowance for Bad Debts account was $9,720. During the year, a total of $23,900 of delinquent accounts receivable was written off as bad debts. The balance in the Allowance for Bad Debts account at December 31, 2016, was $10,480.
Required:
a. What was the total amount of bad debts expense recognized during the year? (Hint: Make a T-account for the Allowance for Bad Debts account.)
b. As a result of a comprehensive analysis, it is determined that the December 31, 2016, balance of Allowance for Bad Debts should be $23,200. Show the adjustment required in journal entry format. (If no entry is required for a transaction/event, select "No journal entry required" in the first account field.)