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2. The company uses the aging of accounts receivable method to determine the amount of bad debt expense. The estimated uncollectible rates for the various age groups are as follows: (Hint: Use a timeline to keep track of accounts receivable in order to determine the age of these receivables.) Estimated X uncollectible Aging of accounts receivable Not yet 1-30 days past due 101 No due 5% a. Determine the amount of receivables that may not be collectible in the future as on June 30, 2020. Answer is complete but not entirely correct. Amount of uncollectible 5 10.800€ Date June 30 b. Prepare the journal entry to record bad debt expense at June 30, 2020, the company's fiscal year-end. (If no entry is required for transaction/event, select "No Journal entry required" In the first account field.) 31-60 days Over 60 days past due 15% past due 20% Answer is complete but not entirely correct. General Journal Bad debt expense Allowance for doubtful accounts 33 Debit 1,350 Credit 1,350

2. The company uses the aging of accounts receivable method to determine the amount of bad debt expense. The estimated uncollectible rates for the various age groups are as follows: (Hint: Use a timeline to keep track of accounts receivable in order to determine the age of these receivables.) Estimated X uncollectible Aging of accounts receivable Not yet 1-30 days past due 101 No due 5% a. Determine the amount of receivables that may not be collectible in the future as on June 30, 2020. Answer is complete but not entirely correct. Amount of uncollectible 5 10.800€ Date June 30 b. Prepare the journal entry to record bad debt expense at June 30, 2020, the company's fiscal year-end. (If no entry is required for transaction/event, select "No Journal entry required" In the first account field.) 31-60 days Over 60 days past due 15% past due 20% Answer is complete but not entirely correct. General Journal Bad debt expense Allowance for doubtful accounts 33 Debit 1,350 Credit 1,350

FINANCIAL ACCOUNTING
FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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P6-6 Determining Bad Debt Expense Based on Aging Analysis and Interpreting Ratios LO6-4 IceKreme Inc. makes ice cream machines for sale to Ice cream parlours. The following events occurred between April 1 and June 30, 2020: April 10: Received an order from Peter's Appliances, a wholesaler, for 28 machines. April 30: Sold 42 machines to Yuri Inc. on credit. May 1: The purchasing manager of Peter's Appliances visited IceKreme's factory and purchased 30 machines on credit, instead of the 28 machines that were previously ordered. 5: Yuri Inc. paid for the machines purchased on April 30. 7: Sold 15 machines to Cheng Ltd. on credit. May May May 18: Wrote off $12,080 of accounts receivable that were considered uncollectible. These receivables relate to sales made prior to April 1, 2020. May 15: Peter's Appliances returned three defective machines and paid the amount due. June 1: Received $180,000 from Cheng Ltd. on account. June 30: Recovered $3,300 from the receivables that were written off on May 10. Additional Information is as follows: I IceKreme sold all machines at $15,000 per unit. All of IceKreme's sales were on credit with terms 3/10, n/30. IceKreme's records Included the following items and their balances as at March 31, 2020: Accounts receivable Allowance of doubtful accounts (credit balance) Net sales $ 66,000 20,400 660,000 Required: 1. Prepare the journal entries to record the transactions that occurred from April 1 to June 30, 2020. (If no entry is required for a transaction/event, select "No Journal entry required" In the first account field.) ✔ Answer is complete and correct. No 1 2 3 4 5 6 7 8 Date April 10 April 30 May 01 May 05 May 07 May 10 May 15 June 01 No journal entry required General Journal Accounts receivable Sales revenue Accounts receivable Sales revenue Cash Sales discounts Accounts receivable Accounts receivable Sales revenue Allowance for doubtful accounts Accounts receivable Cash Sales allowances and returns Accounts receivable Cash Accounts receivable 0000 000 00 00 000 00 Debit 630,000 450,000 611,100 18,900 225,000 12,000 405,000 45,000 180,000 Credit 630,000 450,000 630,000 225,000 12,000 450,000 180,000
Transcribed Image Text:P6-6 Determining Bad Debt Expense Based on Aging Analysis and Interpreting Ratios LO6-4 IceKreme Inc. makes ice cream machines for sale to Ice cream parlours. The following events occurred between April 1 and June 30, 2020: April 10: Received an order from Peter's Appliances, a wholesaler, for 28 machines. April 30: Sold 42 machines to Yuri Inc. on credit. May 1: The purchasing manager of Peter's Appliances visited IceKreme's factory and purchased 30 machines on credit, instead of the 28 machines that were previously ordered. 5: Yuri Inc. paid for the machines purchased on April 30. 7: Sold 15 machines to Cheng Ltd. on credit. May May May 18: Wrote off $12,080 of accounts receivable that were considered uncollectible. These receivables relate to sales made prior to April 1, 2020. May 15: Peter's Appliances returned three defective machines and paid the amount due. June 1: Received $180,000 from Cheng Ltd. on account. June 30: Recovered $3,300 from the receivables that were written off on May 10. Additional Information is as follows: I IceKreme sold all machines at $15,000 per unit. All of IceKreme's sales were on credit with terms 3/10, n/30. IceKreme's records Included the following items and their balances as at March 31, 2020: Accounts receivable Allowance of doubtful accounts (credit balance) Net sales $ 66,000 20,400 660,000 Required: 1. Prepare the journal entries to record the transactions that occurred from April 1 to June 30, 2020. (If no entry is required for a transaction/event, select "No Journal entry required" In the first account field.) ✔ Answer is complete and correct. No 1 2 3 4 5 6 7 8 Date April 10 April 30 May 01 May 05 May 07 May 10 May 15 June 01 No journal entry required General Journal Accounts receivable Sales revenue Accounts receivable Sales revenue Cash Sales discounts Accounts receivable Accounts receivable Sales revenue Allowance for doubtful accounts Accounts receivable Cash Sales allowances and returns Accounts receivable Cash Accounts receivable 0000 000 00 00 000 00 Debit 630,000 450,000 611,100 18,900 225,000 12,000 405,000 45,000 180,000 Credit 630,000 450,000 630,000 225,000 12,000 450,000 180,000
9 10 June 30 June 30 No 1 Accounts receivable Allowance for doubtful accounts Cash Estimated X uncollectible Accounts receivable Date June 30 2. The company uses the aging of accounts receivable method to determine the amount of bad debt expense. The estimated uncollectible rates for the various age groups are as follows: (Hint: Use a timeline to keep track of accounts receivable in order to determine the age of these receivables.) Aging of accounts Not yet due 5% Average collection period receivable 1-30 days past due 10% ℗ 31-60 days past due 15% Bad debt expense Allowance for doubtful accounts a. Determine the amount of receivables that may not be collectible in the future as on June 30, 2020. Answer is complete but not entirely correct. Amount of uncollectible $ 10,800 € ✪ Answer is complete but not entirely General Journal Answer is complete but not entirely correct. 25.5Ⓒ days b. Prepare the journal entry to record bad debt expense at June 30, 2020, the company's fiscal year-end. (If no entry is required for a transaction/event, select "No Journal entry required" in the first account field.) correct. 3,300 3,300✔ OO • Over 60 days past due 20% 3,300 3,300 Debit 1,350 Credit 3. IceKreme's net accounts receivable were $180,000 at June 30, 2019. Calculate IceKreme's average collection period for fiscal year 2020. (Use 365 days a year. Round intermediate calculations to 2 decimal places. Round the final answer to 1 decimal place.) 1,350 €
Transcribed Image Text:9 10 June 30 June 30 No 1 Accounts receivable Allowance for doubtful accounts Cash Estimated X uncollectible Accounts receivable Date June 30 2. The company uses the aging of accounts receivable method to determine the amount of bad debt expense. The estimated uncollectible rates for the various age groups are as follows: (Hint: Use a timeline to keep track of accounts receivable in order to determine the age of these receivables.) Aging of accounts Not yet due 5% Average collection period receivable 1-30 days past due 10% ℗ 31-60 days past due 15% Bad debt expense Allowance for doubtful accounts a. Determine the amount of receivables that may not be collectible in the future as on June 30, 2020. Answer is complete but not entirely correct. Amount of uncollectible $ 10,800 € ✪ Answer is complete but not entirely General Journal Answer is complete but not entirely correct. 25.5Ⓒ days b. Prepare the journal entry to record bad debt expense at June 30, 2020, the company's fiscal year-end. (If no entry is required for a transaction/event, select "No Journal entry required" in the first account field.) correct. 3,300 3,300✔ OO • Over 60 days past due 20% 3,300 3,300 Debit 1,350 Credit 3. IceKreme's net accounts receivable were $180,000 at June 30, 2019. Calculate IceKreme's average collection period for fiscal year 2020. (Use 365 days a year. Round intermediate calculations to 2 decimal places. Round the final answer to 1 decimal place.) 1,350 €
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