P56 Algo Determining Bad Debt Expense Based on Aging Analysis and Interpreting Ratios LO53 54 IceKreme Inc makes ice cream machines for sale to ice cream parlours The following events occurred between April 1 and June 30 of the current year April 10 Received an order from Peters Appliances a wholesaler for 10 machines April 30 Sold 15 machines to Yuri Inc on credit May 1 The purchasing manager of Peters Appliances visited IceKremes factory and purchased 12 machines on credit instead of the 10 machines that were previously ordered May 5 Yuri Inc paid for the machines purchased on April 30 May 7 Sold 2 machines to Cheng Ltd on credit May 10 Wrote off 13300 of accounts receivable that were considered uncollectible These receivables relate to sales made prior to April 1 of the current year May 10 Peters Appliances paid the amount due to IceKreme June 30 Recovered 3650 from the receivables that were written off on May 10 Additional information is as follows IceKreme sold all machines at 16500 per unit All of IceKremes sales were on credit with terms n30 IceKremes records included the following items and their balances as at March 31 of the current year Accounts receivable 86000 Allowance of doubtful accounts credit balance 21500 Net sales 925000 Required 1 Prepare the journal entries to record the transactions that occurred from April 1 to June 30 of the current year If no entry is required for a transactionevent select No journal entry required in the first account field 2 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 due 130 days past due 3160 days past due Over 60 days past due Estimated uncollectible 5 10 15 20 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 companys fiscal yearend If no entry is required for a transactionevent select No journal entry required in the first account field