Reference no: EM133116609

Question - Omicron Ltd. has a petty cash fund for $2,690 when established. When financial statements are prepared at the end of the month it replenishes the fund. The company finds that the fund is empty in the last week of the month so it decides to increase the fund size by 50%. On February 18th, when it is decided to increase the petty cash fund size, there are $1,255 in expense receipts and vouchers that justify the depletion of the fund during the month. Omicron Ltd. decides to replenish and increase the fund size in the same journal entry.

Required 1 - How much is the cheque written to complete this transaction?

At December 31st, Omicron Ltd. has a balance of gross accounts receivables of $10,000. There is $4,725 credit balance in the allowance for doubtful accounts at the beginning of the month. During the month of December, the company had credit sales of $2,690. The company uses the percentage of sales basis to estimate bad debt expenses. Historically, bad debt expense of accounts receivables has averaged 50% of credit sales, for that reason they convert into notes receivables as many ARs as possible. The company estimates $ $1,255 as the uncollectible portion of notes receivables (it is calculated as 5% of notes receivables received during December for credit sales done in same month). Actual write-offs of accounts and notes receivables for the month amount to $218.

Required 2 - The company's bad debt expense for the month of December is?