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ceKreme Inc. makes ice cream machines for sale to ice cream parlours. The following events occurred between April 1 and June 30, 2020: pril 10: Received an order from Peter's Appliances, a wholesaler, for 34 machines. pril 30: Sold 51 machines to Yuri Inc. on credit. ay 1: ay ay ay The purchasing manager of Peter's Appliances visited IceKreme's factory and purchased 36 machines on credit, instead of the 34 machines that were previously ordered. lay 5: Yuri Inc. paid for the machines purchased on April 30. 7: Sold 20 machines to Cheng Ltd. on credit. 10: Wrote off $15,000 of accounts receivable that were considered uncollectible. These receivables relate to sales made prior to April 1, 2020. 15: Peter's Appliances returned two defective machines and paid the amount due. Received $96,000 from Cheng Ltd. on account. une 1: une 30: Recovered $3,600 from the receivables that were written off on May 10. Additional information is as follows: IceKreme sold all machines at $6,000 per unit. All of IceKreme's sales were on credit with terms 2/10, 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 $ 72,000 22,200 720,000

ceKreme Inc. makes ice cream machines for sale to ice cream parlours. The following events occurred between April 1 and June 30, 2020: pril 10: Received an order from Peter's Appliances, a wholesaler, for 34 machines. pril 30: Sold 51 machines to Yuri Inc. on credit. ay 1: ay ay ay The purchasing manager of Peter's Appliances visited IceKreme's factory and purchased 36 machines on credit, instead of the 34 machines that were previously ordered. lay 5: Yuri Inc. paid for the machines purchased on April 30. 7: Sold 20 machines to Cheng Ltd. on credit. 10: Wrote off $15,000 of accounts receivable that were considered uncollectible. These receivables relate to sales made prior to April 1, 2020. 15: Peter's Appliances returned two defective machines and paid the amount due. Received $96,000 from Cheng Ltd. on account. une 1: une 30: Recovered $3,600 from the receivables that were written off on May 10. Additional information is as follows: IceKreme sold all machines at $6,000 per unit. All of IceKreme's sales were on credit with terms 2/10, 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 $ 72,000 22,200 720,000

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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Determine the amount of receivables that may not be collectible in the future as on June 30, 2020.

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 34 machines. April 30: Sold 51 machines to Yuri Inc. on credit. May 1: The purchasing manager of Peter's Appliances visited IceKreme's factory and purchased 36 machines on credit, instead of the 34 machines that were previously ordered. 5: Yuri Inc. paid for the machines purchased on April 30. 7: Sold 20 machines to Cheng Ltd. on credit. 10: Wrote off $15,000 of accounts receivable that were considered uncollectible. These receivables relate to sales made prior to April 1, 2020. May 15: Peter's Appliances returned two defective machines and paid the amount due. June 1: Received $96,000 from Cheng Ltd. on account. June 30: Recovered $3,600 from the receivables that were written off on May 10. May May May Additional information is as follows: • IceKreme sold all machines at $6,000 per unit. • All of IceKreme's sales were on credit with terms 2/10, 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 $ 72,000 22,200 720,000
Transcribed Image Text: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 34 machines. April 30: Sold 51 machines to Yuri Inc. on credit. May 1: The purchasing manager of Peter's Appliances visited IceKreme's factory and purchased 36 machines on credit, instead of the 34 machines that were previously ordered. 5: Yuri Inc. paid for the machines purchased on April 30. 7: Sold 20 machines to Cheng Ltd. on credit. 10: Wrote off $15,000 of accounts receivable that were considered uncollectible. These receivables relate to sales made prior to April 1, 2020. May 15: Peter's Appliances returned two defective machines and paid the amount due. June 1: Received $96,000 from Cheng Ltd. on account. June 30: Recovered $3,600 from the receivables that were written off on May 10. May May May Additional information is as follows: • IceKreme sold all machines at $6,000 per unit. • All of IceKreme's sales were on credit with terms 2/10, 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 $ 72,000 22,200 720,000
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 % uncollectible Aging of accounts receivable Not yet 1-30 days past due 10% Amount of uncollectible due 5% 31-60 days Over 60 days past due 15% past due 20% a. Determine the amount of receivables that may not be collectible in the future as on June 30, 2020.
Transcribed Image Text: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 % uncollectible Aging of accounts receivable Not yet 1-30 days past due 10% Amount of uncollectible due 5% 31-60 days Over 60 days past due 15% past due 20% a. Determine the amount of receivables that may not be collectible in the future as on June 30, 2020.
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