At December 31, 2021, Nicholay Industries reports the following selected accounts from the unadjusted trial balance for its fi rst year of operations:

Instructions

a. Prepare the journal entry to record the bad debt expense on December 31, 2021, assuming the credit manager estimates that 4% of the accounts receivable will become uncollectible.

b. Prepare the current assets section of the balance sheet for Nicholay Industries on December 31, 2021.

c. Calculate the receivables turnover and collection period. (Remember that this is the end of the first year of business.)

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Account Debit Credit Accounts receivable S 700,000 $ 350,000 Accounts payable Cash Cost of goods sold 40,000 1,750,000 Interest receivable 1,125 Interest revenue 2,250 Merchandise inventory Notes receivable, due April 10, 2022 Prepaid insurance Short-term investments 325,000 45,000 8,000 50,000 Sales 4,000,000 Sales returns and allowances 100,000 Unearned revenue 25,000