Canyon CanoeCanyon Canoe

Company has experienced rapid growth in its first few months of operations and has had a significant increase in customers renting canoes and purchasing T-shirts. Many of these customers are asking for credit terms.

Amber and Zack Wilson, stockholders and company managers, have decided it is time to review their business transactions and update some of their business practices. Their first step is to make decisions about handling accounts receivable. So far, year to date credit sales have been $15,500.

A review of outstanding receivables resulted in the following aging schedule:

Age of Accounts as of June 30, 2019
	1-30	31-60	61-90	Over 90	Total
Customer Name	Days	Days	Days	Days	Balance
Canyon Youth Club	$250				$250
Crazy Tees	200	$150			350
Early Start Daycare				$500	500
Lakefront Pavilion	575				575
Outdoor Center			300		300
Rivers Canoe Club	350				350
Sport Shirts	450	120			570
Zach's Marina	75	75	75		225
Total	$1,900	$345	$375	$500	$3,120

Requirement 1. The company wants to use the allowance method to estimate bad debts. Assume a zero beginning balance for Allowance for Bad Debts.

a. Determine the estimated bad debts expense under the percent-of-sales methods at

June 30, 2019.

Assume that 4.5% of credit sales will not be collected. (Round to the nearest dollar.)

	Method	Estimated Bad Debts
a.	Percent-of-sales