Wood Work Ltd. sells home furnishings, including a wide range of furniture, major appliances, and home electronics. In a recent annual report, it disclosed the following information concerning its trade receivables. Aging of trade receivables, and the related impairment allowances, are provided in the following table (in thousands of dollars):

The changes to the allowance for doubtful trade receivables for 2014 were as follows:

Required:
1. Compute the percentage of uncollectible accounts for each category of receivables that are past due, and comment on the results.
2. How did the company determine the losses due to unrecoverable receivables or bad debt expense?
3. Record summary journal entries related to bad debts for the current year.
4. If Wood Work had written off an amount of an additional $ 10,000 in trade receivables during the period, how would net trade receivables and net earnings have been affected? Explain.

Transcribed Image Text:

Doubtful Accounts 2014 Current 31-60 days 61-90 days 91-120 days More than 120 days $19,500 5,000 2,300 3.400 100 65 985 $30.200 $1,150 Balance at beginning of year impairment losses for unrecoverable receivables Amounts written off as uncollectible Balance at end of year 2014 $1,200 1,300 (1.150) $1,350