Part A

On December 31, 2030, Penguin Company has a debit balance in Allowance for Uncollectible Accounts of $2,500 before adjustment. The balance of Accounts Receivable is $180,000, and the company estimates that 5% of accounts receivable will not be collected over the next year.

1. Record the adjusting entry for uncollectible accounts on December 31, 2030.
2. Determine the amount at which Bad Debt Expense is reported in the income statement and the Allowance for Uncollectible Accounts is reported in the balance sheet.
3. Calculate the net realizable value of accounts receivable.

Part B

On May 1, 2030, Stork Company lends $200,000 to one of its main suppliers and accepts a 12-month, 8% note.

1. Record the acceptance of the note on the issuance date, May 1, 2030.
2. Record the adjusting entry on the last day of the accounting period, December 31, 2030.
3. Record the cash collection journal entry on the maturity date, May 1, 2031.

Part C: Review the amounts for two companies. Next, make calculations to evaluate the company's cash position:

1. For each company, calculate the receivables turnover ratio (round answer to two decimal points; average accounts receivable can be calculated by adding the beginning and ending balances together and then dividing the sum by two).
2. For each company, calculate the average collection period (round answer to two decimal points; average accounts receivable can be calculated by adding the beginning and ending balances together and then dividing the sum by two).
3. Which company appears more efficient in collecting cash from sales? Please explain your answer.

	Beginning Accounts Receivable (net)	Ending Accounts Receivable (net)	Net Credit Sales
Company 1	$ 1,900	$ 1,600	$ 25,000
Company 2	3,700	2,100	71,000