has developed a new gadget. If the gadget is successful, the present value of the payoff (at the time the product is brought to market) is $21 million. If the gadget fails, the present value of the payoff is $8 million. If the gadget goes directly to market, there is a 50 percent chance of success. Alternatively, the company can delay the launch by one year and spend $1.2 million to test-market the gadget. Test-marketing would allow the firm to improve the gadget and increase the probability of success to 75%. The appropriate discount rate is 10%. Should the firm conduct test-marketing

Exercise 7-7 martinez company reports the following financial information before adjustments. dr. cr. accounts receivable $168,900 allowance for doubtful accounts $3,200 sales revenue (all on credit) 849,300 sales returns and allowances 50,440 prepare the journal entry to record bad debt expense assuming martinez company estimates bad debts at (a) 4% of accounts receivable and (b) 4% of accounts receivable but allowance for doubtful accounts had a $1,550 debit balance. (if no entry is required, select "no entry" for the account titles and enter 0 for the amounts. credit account titles are automatically indented when the amount is entered. do not indent manually.)