Q. BE7.8 ) Continuationb) Prepare the current assets section of the statement of financial position for Wendy Ltd., assuming that in addition to the receivables it has cash of $90,000 , inventory of $130,000 and prepaid expenses of $13,000

(a) Advanced $10000 to an employee. (b) Received a promissory note of $57 000 for services performed. (c) Sold inventory on account for $60 000 to a customer. BE7.7 Prepare entry using allowance method. LO8 Massey Ltd uses the allowance method to record bad debts expense and concludes, using the ageing of accounts receivable method, that 1% of accounts receivable will become uncollectable. Accounts receivable are $500 000 at the end of the year, and the allowance for doubtful debts has a credit balance of $3000. (a) Prepare the adjusting journal entry to record bad debts expense for the year. (b) If the allowance for doubtful debts had a debit balance of $800 instead of a credit balance of $3000, determine the amount to be reported for bad debts expense. BE7.8 Prepare entry for estimated uncollectables and classifications, and calculate ratios. LO8, 9, 10 During its first year of operations, Wendy Ltd had credit sales of $3 million, of which $600 000 remained uncollected at year-end. The credit manager estimates that $40 000 of these receivables will become uncollectable. (a) Prepare the journal entry to record the estimated uncollectables. (Assume the allowance account has an unadjusted balance of nil.) CHAPTER 7 Reporting and analysing cash and receivables 481