Part 1 of 7 O Points: 0 of 15 O Save Calla 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. Anna and Zain 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 $24,000. A review of outstanding receivables resulted in the following aging schedule: (Click the icon to view the aging schedule.) Read the requirements Data table X 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, 2025. Assume that 3% of credit sales will not be collected (Round to the nearest dollar) Method Estimated Bad Debts a. Percent-of-sales Days Age of Accounts as of June 30, 2025 1-30 31-60 61-90 Over 90 Total Customer Name Days Days Days Balance Mountain Youth Club S 200 $ 200 Shirts On 700 $ 600 1,300 Sunrise Daycare S 400 400 Oceanside Pavilion 600 600 Elderly Center 800 800 Peacock Yacht Club 1.200 1.200 Birch Shirts 300 1.100 1400 Yang's Marina 100 100 100 300 Total $ 3.100 $ 1,800 $ 900 S 400 $ 6.200 Print Done - Requirements 1. The company wants to use the allowance method to estimate bad debts. Determine the estimated bad debts expense under the following methods at June 30, 2025. Assume a zero beginning balance for Allowance for Bad Debts. Round to the nearest dollar. a. Percent-of-sales method, assuming 3% of credit sales will not be collected. b. Percent-of-receivables method, assuming 16% of receivables will not be collected. c. Aging-of-receivables method, assuming 10% of invoices 1-30 days will not be collected, 30% of invoices 31-60 days, 35% of invoices 61-90 days, and 40% of invoices over 90 days. 2. Journalize the entry at June 30, 2025, to adjust for bad debts expense using the percent-of-sales method. 3. Journalize the entry at June 30, 2025, to record the write-off of the Sunrise Daycare invoice 4. At June 30, 2025, T-accounts for Accounts Receivable and Allowance for Bad Debts before Requirements 2 and 3 have been opened for you. Post entries from Requirements 2 and 3 to those accounts. Assume a zero beginning balance for Allowance for Bad Debts. 5. Show how Calla Canoe Company will report net accounts receivable on the balance sheet on June 30, 2025. Print Done