P6-6 Determining Bad Debt Expense Based on Aging Analysis and Interpreting Ratios LO6-4 IceKreme Inc. makes ice cream machines for sale to ice cream parlours. The following events occurred between April 1 and June 30, 2017: April 10: Received an order from Peter's Appliances, a wholesaler, for 18 machines. April 30: Sold 27 machines to Yuri Inc. on credit. May 1: The purchasing manager of Peter's Appliances visited IceKreme's factory and purchased 21 machines on credit, instead of the 18 machines that were previously ordered. May 5: Yuri Inc. paid for the machines purchased on April 30. May 7: Sold 10 machines to Cheng Ltd. on credit. May 10: Wrote off $16,000 of accounts receivable that were considered uncollectible. These receivables relate to sales made prior to April 1, 2017. May 15: Peter's Appliances returned two defective machines and paid the amount due. June 1: Received $96,000 from Cheng Ltd. on account. June 30: Recovered $2,800 from the receivables that were written off on May 10. Additional information is as follows: IceKreme sold all machines at $12,000 per unit. All of IceKreme's sales were on credit with terms 2/10, n/30. IceKreme's records included the following items and their balances as at March 31, 2017: . Accounts receivable Allowance of doubtful accounts (credit balance) Net sales $ 56,000 17,400 560,000 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.) Aging of accounts receivable Not yet 130 days past 31-60 days past due due due 5% 10% 15% Over 60 days past due 20% Estimated % uncollectible a. Determine the amount of receivables that may not be collectible in the future. Amount of uncollectible b. Prepare the journal entry to record bad debt expense at June 30, 2017, 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.) View transaction list Journal entry worksheet Record the bad debt expenses estimated for the period. Note: Enter debits before credits. Date General Journal Debit Credit June 30 Record entry Clear entry View general journal