Question
The Big Credit Company loaned $1 billion to real estate developers. It estimated that it would not be able to collect $20 million based on
The Big Credit Company loaned $1 billion to real estate developers. It estimated that it would not be able to collect $20 million based on its expectations of future vagaries in the real estate markets into which it leant.
Make journal entries to record the loans and an allowance for anticipated uncollectible accounts.
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One loan of $1 million was deemed to be uncollectible and written off. Make a journal entry to record the write-off.
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Would the journal entry you made in relation to question b. reduce income by itself?
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One loan of $10 million was deemed to be uncollectible. The Big Credit Company took possession of the real estate that had secured the loan to compensate it for what it was owed. The real estate was valued at $7 million. Make a journal entry to record taking possession of the real estate and any write-off necessary in relation to the remaining amount owed.
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College Accounting
Authors: Heintz and Parry
20th Edition
1285892070, 538489669, 9781111790301, 978-1285892078, 9780538489669, 1111790302, 978-0538745192
