TB PR Qu. 5.234 (Statlc) By the end of Its flist year of operations... By the end of Its first year of operations, Elgin Corporation has credit sales of $580,000 and accounts recelvable of $200,000. Glven It's the first year of operations, Elgin's management is unsure how much allowance for uncollectlble accounts it should establish. One of the company's competitors, which has been In the same Industry for an extended perlod, estimates uncollectible accounts to be 3% of ending accounts recelvable, so Elgin decides to use that same amount. However, actual write-offs in the following year were 10% of the $200,000($20,000). Elgin's inexperlence in the industry led to making sales to high credit risk customers. Required: 1. Record the adjusting entry for uncollectible accounts at the end of the first year of operations using the 3% estimate of accounts recelvable. 2 By the end of the second year, Elgin has the benefit of hindsight to know that estimates of uncollectible accounts In the first year were too low. By how much did Elgin underestimate uncollectible accounts In the first year? How did this underestimation affect the reported amounts of total assets and expenses at the end of the first year? Ignore tax effects. 3. Should Elgin prepare new financlal statements for the first year of operations to show the correct amount of uncollectible accounts? Complete this question by entering your answers in the tabs below. Should Elgin prepare new financial statements for the first year of operations to show the correct amount of uncollectible accounts? Should Elgin prepare new financial statements for the first year of operations to show the correct amount of uncollectible accounts? TB PR Qu. 5.234 (Static) By the end of Its first year of operations... By the end of Its first year of operations, Elgin Corporation has credit sales of $580,000 and accounts recelvable of $200,000. Glven It's the first year of operations, Elgin's management is unsure how much allowance for uncollectible accounts it should establish. One of the company's competitors, which has been In the same Industry for an extended perlod, estimates uncollectible accounts to be 3% of ending accounts recelvable, so Elgin decides to use that same amount. However, actual write-offs in the following year were 10% of the $200,000 (\$20,000). Elgin's inexperlence in the Industry led to making sales to high credit risk customers. Required: 1. Record the adjusting entry for uncollectible accounts at the end of the first year of operations using the 3% estimate of accounts recelvable. 2 By the end of the second year, Elgin has the benefit of hindsight to know that estimates of uncollectible accounts in the first year were too low. By how much did Elgin underestimate uncollectible accounts In the first year? How did this underestimation affect the reported amounts of total assets and expenses at the end of the first year? Ignore tax effects. 3. Should Elgin prepare new financlal statements for the first year of operations to show the correct amount of uncollectible accounts? Complete this question by entering your answers in the tabs below. By the end of the second year, Elgin has the benefit of hindsight to know that estimates of uncollectible accounts in the first. year were too low. By how much did Elgin underestimate uncollectible accounts in the first year? How did this underestimation affect the reported amounts of total assets and expenses at the end of the first year? Ignore tax effects. TB PR Qu. 5.234 (Static) By the end of Its flist year of operations... By the end of its first year of operations, Elgin Corporation has credit sales of $580,000 and accounts recelvable of $200,000. Glven It's the first year of operations, Elgin's management is unsure how much allowance for uncollectlble accounts it should establish. One of the company's competitors, which has been In the same Industry for an extended perlod, estimates uncollectible accounts to be 3% of ending accounts recelvable, so Elgin decides to use that same amount. However, actual write-offs in the following year were 10% of the $200,000 ( $20,000). Elgin's inexperlence in the industry led to making sales to high credit risk customers. Required: 1. Record the adjusting entry for uncollectible accounts at the end of the first year of operations using the 3% estimate of accounts recelvable. 2 By the end of the second year, Elgin has the benefit of hindsight to know that estimates of uncollectible accounts in the first year were too low. By how much did Elgin underestimate uncollectible accounts In the first year? How did this underestimation affect the reported amounts of total assets and expenses at the end of the first year? Ignore tax effects. 3. Should Elgin prepare new financlal statements for the first year of operations to show the correct amount of uncollectible accounts? Complete this question by entering your answers in the tabs below. Record the adjusting entry for uncollectible accounts at the end of the first year of operations using the 3% estimate of accounts receivable. (If no entry is required for a particular transaction/event, select "No Joumal Entry Required" in the first account field.)