P$5-6($Algo$)$ Determining Bad Debt Expense Based on Aging Analysis and Interpreting Ratios LO$5-3,5-4$

IceKreme Inc. makes ice cream machines for sale to ice cream parlours. The following events occurred between April $1$ and June $30$ of the current year:

April $10$ Received an order from Peter$$s Appliances, a wholesaler, for $10$ machines.

April $30$ Sold $15$ machines to Yuri Inc. on credit.

May $1$ The purchasing manager of Peter$$s Appliances visited IceKreme$$s factory and purchased $12$ machines on credit, instead of the $10$ machines that were previously ordered.

May $5$ Yuri Inc. paid for the machines purchased on April $30.$

May $7$ Sold $2$ machines to Cheng Ltd$.$ on credit.

May $10$ Wrote off $$13,800$ of accounts receivable that were considered uncollectible. These receivables relate to sales made prior to April $1$ of the current year.

May $10$ Peter$$s Appliances paid the amount due to IceKreme.

June $30$ Recovered $$3,900$ from the receivables that were written off on May $10.$

Additional information is as follows:

IceKreme sold all machines at $$19,000$ per unit.

All of IceKreme$$s sales were on credit with terms n$/30.$

IceKreme$$s records included the following items and their balances as at March $31$ of the current year:

Accounts receivable $ $96,000$

Allowance of doubtful accounts $($credit balance$)24,000$

Net sales $1,050,000$

Required:

$1.$ Prepare the journal entries to record the transactions that occurred from April $1$ to June $30$ of the current year. $($If no entry is required for a transaction$/$event$,$ select $"$No journal entry required" in the first account field.$)$

$2.$ The company uses the aging of accounts receivable method to determine the amount of bad debt expense. The estimated uncollectible rates for the various age groups are as follows: $($Hint: Use a timeline to keep track of accounts receivable in order to determine the age of these receivables.$)$

Analysis of Aged Accounts Receivable

Not yet due $130$ days

past due $3160$ days

past due Over $60$ days

past due

Estimated $\%$ uncollectible $5\%10\%15\%20\%$

a$.$ Determine the amount of receivables that may not be collectible in the future as on June $30$ of the current year.

b$.$ Prepare the journal entry to record bad debt expense at June $30$ of the current year, the company$$s fiscal year$-$end. $($If no entry is required for a transaction$/$event$,$ select $"$No journal entry required" in the first account field.$)$

$3.$ IceKreme$$s net accounts receivable were $$80,000$ at June $30$ of the prior year. Calculate IceKreme$$s average collection period for the current fiscal year. $($Use $365$ days a year. Round intermediate calculations to $2$ decimal places. Round the final answer to $1$ decimal place.$)$