MI predicts that it will take approximately one month to disas- semble the equipment. MI has had a number of interested buyers but one in particular has expressed some strong interest. A new company wanting to produce outdoor resin furniture is interested, but is unable to purchase the equipment immediately because it won't be opening up until February 2021. The potential buyer is, however, willing to place a 25% deposit on the equipment immediately. . like to know why and for you to make any correcting entry that you feel is appropriate. MI sells to many customers on credit. MI employs a credit manager who reviews a client's financial history prior to allowing them to buy on credit. It is MI's policy to use the allowance for doubtful accounts method based upon the aging of receivables. The balance is adjusted yearly after taking into account any adjustments for customers' accounts written off. A snapshot of MI's current accounts receivable balance at year end shows that it has a balance of $529,200 with an allowance for doubtful accounts debit balance of $6,000. (Note that this is prior to any adjusting journal entries that you would make.) A more detailed breakdown of the accounts receivable balance shows the following amounts aged: 030 days: 31-60 days: 61-90 days: Greater than 90 days: $280,000 $155,000 $ 75,600 $ 18,600 20 You note that included in the above aged balances is an amount of $30,000 from a customer, Cutthroat Kitchens. This customer went bankrupt in November 2020, and there is no possibility of receiving payment from it. Fred doesn't know what to do with this amount but knows that you will. It is standard MI policy that 2% of receivables from 0 to 30 days will ultimately be uncollectible, 4% for 3160 days, 20% for 61-90 days, and 80% greater than 90 days will be uncollect- ible. This policy is implemented after adjusting for any amounts at year end that will definitely not be collected. MI predicts that it will take approximately one month to disas- semble the equipment. MI has had a number of interested buyers but one in particular has expressed some strong interest. A new company wanting to produce outdoor resin furniture is interested, but is unable to purchase the equipment immediately because it won't be opening up until February 2021. The potential buyer is, however, willing to place a 25% deposit on the equipment immediately. . like to know why and for you to make any correcting entry that you feel is appropriate. MI sells to many customers on credit. MI employs a credit manager who reviews a client's financial history prior to allowing them to buy on credit. It is MI's policy to use the allowance for doubtful accounts method based upon the aging of receivables. The balance is adjusted yearly after taking into account any adjustments for customers' accounts written off. A snapshot of MI's current accounts receivable balance at year end shows that it has a balance of $529,200 with an allowance for doubtful accounts debit balance of $6,000. (Note that this is prior to any adjusting journal entries that you would make.) A more detailed breakdown of the accounts receivable balance shows the following amounts aged: 030 days: 31-60 days: 61-90 days: Greater than 90 days: $280,000 $155,000 $ 75,600 $ 18,600 20 You note that included in the above aged balances is an amount of $30,000 from a customer, Cutthroat Kitchens. This customer went bankrupt in November 2020, and there is no possibility of receiving payment from it. Fred doesn't know what to do with this amount but knows that you will. It is standard MI policy that 2% of receivables from 0 to 30 days will ultimately be uncollectible, 4% for 3160 days, 20% for 61-90 days, and 80% greater than 90 days will be uncollect- ible. This policy is implemented after adjusting for any amounts at year end that will definitely not be collected
