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
Cornerstones of Financial Accounting
4th Edition
ISBN:9781337690881
Author:Jay Rich, Jeff Jones
Publisher:Jay Rich, Jeff Jones
Chapter5: Sales And Receivables
Section: Chapter Questions
Problem 85APSA: Determining Bad Debt Expense Using the Aging Method At the beginning of the year, Tennyson Auto...
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Determine the amount of receivables that may not be collectible in the future as on June 30, 2020.
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
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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