Rainy Day Corp. produces and distributes umbrellas around the world to both wholesalers and direct retailers. Rainy Day Corp. sells most of the products on credit to its customers.

The December 31, 2023 aged receivables report is as follows:

		% Estimate of Uncollectable		Amount Outstanding at Dec 31, 2023
0 to 30		1%		$225,000
31 to 60		6%		$175,000
61 to 90		7%		$57,000
Over 90		25%		$25,000

Instructions

1) Calculate the allowance for expected credit losses at Dec 31, 2023 assuming that there is an existing balance in the allowance for expected credit losses account of Dr. $1,500 prior to any year-end adjusting entries.

2) Prepare the required year-end journal entry to recognize Loss on Impairment.

3) Calculate the net realizable value of accounts receivable as it would appear on the Statement of Financial Position.

Answer rating: 100% (QA)

1 Calculate the allowance for expected credit losses at De... View the full answer