Clarissa Company has credit sales of $550,000 during 2019 and estimates at the end of 2019 that 2.5% of these credit sales will eventually default. Also, during 2019 a customer defaults on a $775 balance related to goods purchased in 2018. Prior to the write-off for the $775 default, Clarissa's accounts receivable and allowance for doubtful accounts balances were $402,000 and $129 (credit), respectively. Required: 1.  Prepare the journal entry to record the defaulted account.   Allowance for Doubtful Accounts        Accounts Receivable        Record write-off of defaulted account         2.  Prepare the adjusting entry to record the bad debt expense for 2019.   Bad Debt Expense        Allowance for Doubtful Accounts        Record adjusting entry for bad debt expense estimate

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Conversion Cycle

Conversion cycle is also known as cash cycle or net operating cycle. Conversion cycle refers to how much time a company takes to turn its investments which is done from stock or any other financial resources into cash flows from sales.