Question: Jenkins Products has just been paid 25 000 by Shirley

Jenkins Products has just been paid $ 25,000 by Shirley Enterprises, which has owed Jenkins this amount for 30 months but been unable to pay because of financial difficulties. Had it been able to invest this cash, Jenkins assumes that it would have earned an interest rate of 12 percent com-pounded monthly (1 percent per month).
Round answers to two decimal places.
1. Prepare a cash flow diagram for the investment that could have been made if Shirley had paid 30 months ago.
2. Determine how much Jenkins has lost by not receiving the $ 25,000 when it was due 30 months ago.
3. Indicate whether Jenkins would make an entry to account for this loss. Why, or why not?

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  • CreatedSeptember 22, 2015
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