Question
WonderWilderness Company has experienced rapid growth in its first few months of operations and has had a significant increase in customers renting canoes and purchasingT-shirts.
WonderWilderness Company has experienced rapid growth in its first few months of operations and has had a significant increase in customers renting canoes and purchasingT-shirts. Many of these customers are asking for credit terms. Ashley and Zohar Wilson, stockholders and companymanagers, 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. Sofar, year to date credit sales have been $ 24 comma 000
$24,000. A review of outstanding receivables resulted in the following agingschedule:
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 thepercent-of-sales methods at June
June 30
30, 2019
2019. Assume that 5
5% of credit sales will not be collected. (Round to the nearestdollar.)
Method
Estimated Bad Debts
a.
Percent-of-sales
$1,200
b. Determine the estimated bad debts expense under thepercent-of-receivables methods at June
June 30 2019. Assume that 22% of receivables will not be collected. (Round to the nearestdollar.)
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