Question: Please show formula used and cell reference Always use cell references and formulas where appropriate to receive full credit. If you copy/paste from the Instruction
Please show formula used and cell reference
| Always use cell references and formulas where appropriate to receive full credit. If you copy/paste from the Instruction tab you will be marked wrong. |
Hiteck Electronics sells a diagnostic machine to a hospital with a four-year payment plan. The company would like to estimate the bad debt allowance needed to cover the notes outstanding over the next four years. Estimated lost cash flows and the probability of occurrence for each of the next four years are summarized in the following schedule.
| Year | Projected Cash Flow Loss from Uncollected Notes | Probability of Loss Occurring |
| 2023 | $8,000 | 90% |
| 18,000 | 10% | |
| 2024 | $10,000 | 15% |
| 22,000 | 70% | |
| 45,000 | 15% | |
| 2025 | $6,000 | 85% |
| 14,000 | 15% | |
| 2026 | $26,000 | 50% |
| 35,000 | 50% | |
| Risk-free rate | 8% |
| Use the blue shaded areas on the ENTERANSWERS tab for inputs. | |||||||||||
| Always use cell references and formulas where appropriate to receive full credit. If you copy/paste from the Instruction tab you will be marked wrong. | |||||||||||
| Requirement | ||||
| What is the estimated bad debt allowance at December 31, 2022? | ||||
| Year | Future value (FV) |
| 2023 | |
| 2024 | |
| 2025 | |
| 2026 | |
| Total Present Value (PV) |
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