9-3BCanmore Services Inc. started business on March 1, 2020. The company produces monthly financial statements and had total sales of $600,000 (of which $570,000 were on account) during the first four months.

On June 30, the Accounts Receivable account had a balance of $210,000 (no accounts have been written off to date), which was made up of the following accounts aged according to the date the services were provided:

The following accounts receivable transactions took place in July 2020:

Jul.12 Determined the account of Vesuvus Ltd. was uncollectible and wrote it off.

15 Collected $4,200 from Torrance Trucks for services in the first three months.

21 Decided the account of Lou Del Rio was uncollectible and wrote it off.

24 Collected $6,408 from Mort Black for services in the month of March.

26 Received a cheque from Lou Del Rio for $9,600 plus two cheques, of $9,408 each, postdated to September 10 and November 10.

31 Total sales of service in the month were $162,000; 90 percent of these were on on account and 60 percent of the sales on account were collected in the month.

Required

1.Canmore Services Inc. has heard that other companies in the industry use the allowance method of accounting for uncollectibles, with many of these estimating the uncollectable through an aging of accounts receivable.

a.Journalize the adjustments that would have to be made on June 30 (for the months of March through June), assuming the following estimates of uncollectable:

Age of Accounts Receivable

Estimated Percent Uncollectible

From current month 1%

From prior month 3%

From two months prior 6%

From three months prior 20%

From four months prior 40%

b.(Round your total estimate to the nearest whole dollar.)

c.Journalize the transactions of July 2020.

d.Journalize the month-end adjustment, using the information from the table that appears in Requirement

e.1a.

2.For the method of accounting for the uncollectable used above, show:

a.The balance sheet presentation of the accounts receivable.

b.The overall effect of the uncollectable on the income statement for the months of June and July 2020.