Wicked Wild 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. Ashlyn and Ziggy 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 $23,000. A review of outstanding receivables resulted in the following aging schedule: |(Click the icon to view the aging schedule.) Read the requirements. 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, 2019. Assume that 5.5% of credit sales will not be collected. (Round to the nearest dollar.) Method Estimated Bad Debts a. Percent-of-sales b. Determine the estimated bad debts expense under the percent-of-receivables methods at June 30, 2019. Assume that 19% of receivables will not be collected. (Round to the nearest dollar.) Method Estimated Bad Debts b. Percent-of-receivables c. Determine the estimated bad debts expense under the aging-of-receivables methods at June 30, 2019. Assume that 20% of invoices 1-30 days will not be collected, 25% of invoices 31-60 days, 35% of invoices 61-90 days, and 50% of invoices over 90 days. (Round intermediary computations and your final answer to the nearest dollar.) Method Estimated Bad Debts c. Aging-of-receivables Requirement 2. Journalize the entry at June 30, 2019, to adjust for bad debts expense using the percent-of-sales method. (Record debits first, then credits. Select the explanation on the last line of the journal entry table.) Date Accounts and Explanation Debit Credit Jun. 30 Requirement 3. Journalize the entry at June 30, 2019, to record the write-off of the Sunrise Daycare invoice. (Record debits first, then credits. Select the explanation on the last line of the journal entry table. Assume that the Sunrise Daycare invoice makes up the entire Sunrise Daycare receivable balance. Continue to assume that the percent-of-sales method is in use.) Date Accounts and Explanation Debit Credit Jun. 30 Requirement 4. At June 30, 2019, 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. For each account, enter the balance, "Bal.", prior to the Jun. 30 entries on the first line of the T-account. Post the two Jun. 30 entries, using "Jun. 30" posting references, on the second lines of the T-accounts. Use the final line of the T-accounts to enter the adjusted balances, along with a "Bal." reference. (If an account has a zero balance, select the "Bal." reference and enter "0" on the appropriate side of the T-account.) Accounts Receivable Allowance for Bad Debts Requirement 5. Show how Wicked Wild Company will report net accounts receivable on the balance sheet on June 30, 2019. (Continue to assume that the percent-of-sales method is in use and that the entries from Requirements 2 and 3 have been posted to the ledger.) Balance Sheet (Partial): Current Assets: - Data table Age of Accounts as of June 30, 2019 1-30 31-60 61-90 Over 90 Total Customer Name Days Days Days Days Balance Little Lion's Club $ 900 $ 900 600 $ 100 700 Tee Cup Sunrise Daycare $ 300 300 Riverfront Pavilion 800 800 Mill Center 1,100 1,100 Big Boat Yacht Club 400 400 Shark Shirts 1,000 1,000 2,000 200 200 200 600 Zoe's Marina $ 3,900 $ 1,300 $ 1,300 $ 300 $ 6,800 Total 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, 2019. Assume a zero beginning balance for Allowance for Bad Debts. Round to the nearest dollar. a. Percent-of-sales method, assuming 5.5% of credit sales will not be collected. b. Percent-of-receivables method, assuming 19% of receivables will not be collected. c. Aging-of-receivables method, assuming 20% of invoices 1-30 days will not be collected, 25% of invoices 31-60 days, 35% of invoices 61-90 days, and 50% of invoices over 90 days. 2. Journalize the entry at June 30, 2019, to adjust for bad debts expense using the percent-of-sales method. 3. Journalize the entry at June 30, 2019, to record the write-off of the Sunrise Daycare invoice. 4. At June 30, 2019, 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 Wicked Wild Company will report net accounts receivable on the balance sheet on June 30, 2019