Acurrency is said to be freely convertible when: residents alone are allowed to convert it into a foreign currency without any limitations. neither residents nor nonresidents are allowed to convert it into a foreign currency. both residents and nonresidents are allowed to purchase unlimited amounts of a foreign currency with it. its exchange rate with respect to other currencies is decided by the central bank of the country.

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.)