During its first year of operations, Wendy Company had credit sales of

$3,000,000, of which $600,000 remained uncollected at year-end. The credit manager estimates that $40,000 of these receivables will become uncollectible.

(a) Prepare the journal entry to record the estimated uncollectibles. (Assume an unadjusted balance of zero.)

(b) Prepare the current assets section of the balance sheet for Wendy Company, assuming that in addition to the receivables it has cash of $90,000, merchandise inventory of $130,000, and prepaid expenses of $13,000.

(c) Calculate the credit risk ratio, receivables turnover ratio, and average collection period. Assume that average net receivables were $530,000.