Explain why the bid-ask spread is a transaction cost.(Select from the drop-down menus.)Investors always buy at the 1. (ask/bid) and sell at the
2. (ask/bid). Since
3. (ask/bid) prices always exceed
4. (bid/ask) prices, investors "
5. (lose/gain)" this difference.
It is one of the transaction costs. Since the market makers take the other side of the trade, they make this difference.

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.)