By the end of its first year of operations, Elgin Corporation has credit sales of $630,000 and accounts receivable of $230,000, Gh it's the first year of operations, Elgin's management is unsure how much allowance for uncollectible accounts it should establish. of the company's competitors, which has been in the same industry for an extended period, estimates uncollectible accounts to b of ending accounts recelvable, so Elgin decides to use that same amount. However, actual write-offs in the following year were 2 the $230,000(=$46,000). Elgin's inexperience in the industry led to making sales to high credit risk customers. Required: 1. Record the adjusting entry for uncollectible accounts at the end of the first year of operations using the 4% estimate of accoun recelvable. 2. By the end of the second year, Elgin has the benefit of hindsight to know that estimates of uncollectible accounts in the first y were too low. By how much did Elgin underestimate uncollectible accounts in the first year? How did this underestimation affect reported amounts of total assets and expenses at the end of the first year? Ignore tax effects. 3. Should Elgin prepare new financial statements for the first year of operations to show the correct amount of uncollectible acc Complete this question by entering your answers in the tabs below. Record the adjusting entry for uncollectible accounts at the end of the first year of operations using the 4% estimate of accounts recelvable. (If no entry is required for a particular transaction/event, select "No Journal Entry Required" in the first account field.) Journal entry worksheet Record the adjusting entry for uncollectible accounts. of the company's competitors, which has been in the same industry to dint. However, of ending accounts receivable, so Elgin decides to use that same amount. However, the $230,000(=$46,000). Elgin's inexperience in the industry led to making sales to Required: 1. Record the adjusting entry for uncollectible accounts at the end of the first year of receivable. 2. By the end of the second year, Elgin has the benefit of hindsight to know that est were too low. By how much did Elgin underestimate uncollectible accounts in the fir reported amounts of total assets and expenses at the end of the first year? Ignore the 3. Should Elgin prepare new financial statements for the first year of operations to s Complete this question by entering your answers in the tabs below. By the end of the second year, Eigin has the benefit of hindsight to know that estimat year were too low. By how much did Elgin underestimate uncollectible accounts in the affect the reported amounts of total assets and expenses at the end of the first year? stion by entering your answers in the tabs below. new financial statements for the first year of operations to show the correct amount of uncoliectible accounts
