P5-6 (Algo) Determining Bad Debt Expense Based on Aging Analysis and Interpreting Ratios LO5-3, 5-4 lceKreme Inc. makes ice cream machines for sale to ice cream parlours. The following events occurred between April 1and June 30 of the current year: April 1@ April 30 May 1 May 5 May 7 May 1@ May 1@ June 3@ Received an order from Peter''s Appliances, a wholesaler, for 18 machines. Sold 15 machines to Yurli Inc. eon credit. The purchasing manager of Peter's Appliances visited IceKreme's factory and purchased 12 machines on credit, instead of the 1@ machines that were previously ordered. Yuri Inc. paid for the machines purchased on April 3@. Sold 2 machines to Cheng Ltd. on credit. Wrote off $12,400 of accounts receivable that were considered uncollectible. These receivables relate to sales made prior to April 1 of the current year. Peter's Appliances paid the amount due to IceKreme. Recovered $3,20@0 from the receivables that were written off on May 1@. Additional information is as follows: + IceKreme sold all machines at $12,000 per unit. All of IceKreme's sales were on credit with terms n/30. IceKreme's records included the following items and their balances as at March 31 of the current year: Accounts receivable % 68,000 Allowance of doubtful accounts (credit balance) 17,000 Net sales 700,000 Required: 1. Prepare the journal entries to record the transactions that occurred from April 1to June 30 of the current year. {If no entry is required for a transaction/event, select "No journal entry required" in the first account field.) View transaction list View journal entry worksheet s 1 April 10 Mo journal entry required s 2 April 30 Accounts receivable 180,000 Sales revenue 180,000 s' 3 May 01 Accounts receivable 144,000 Sales revenue 144,000 A4 May 05 Cash 180,000 Accounts receivable 180,000 A5 May 07 Accounts receivable 24,000 Sales revenue 24,000 /s 6 May 10 Allowance for doubtful accounts 12,400 Accounts receivable 12,400 Fa 7 May 10 Cash 144,000 Accounts receivable 144,000 8 June 30 Accounts receivable 3,200 Allowance for doubtful accounts 3,200 9 June 30 Cash 3,200 Accounts receivable 3,2002. The company uses the aging of accounts receivable method to determine the amount of bad debt expense. The estimated uncollectible rates for the various age groups are as follows: (Hint: Use a timeline to keep track of accounts receivable in order to determine the age of these receivables.) Analysis of Aged Accounts Receivable Not yet 1-3@ days 31-60 days Over 6@ days due past due past due past due Estimated % uncollectible 5% 18% 15% 208% a. Determine the amount of receivables that may not be collectible in the future as on June 30 of the current year. b. Prepare the journal entry to record bad debt expense at June 30 of the current year, the company's fiscal year-end. (If no entry is required for a transaction/event, select "No journal entry required" in the first account field.) View transaction list Journal entry worksheet Record the bad debt expenses estimated for the period. Note: Enter debits before credits. June 30 3. IceKreme's net accounts receivable were $84,000 at June 30 of the prior year. Calculate Icekreme's average collection period for the current fiscal year. (Use 365 days a year. Round intermediate calculations to 2 decimal places. Round the final answer to 1 decimal place.) Average collection period : days