Question - During Its first year of operations, Wendy Ltd had credit sales of $3 million, of which $600 000 remained uncollected at year-end. The credit manager estimates that $40 000 of these receivables will become uncollectable.
a. Prepare the journal entry to record the estimated uncollectables. (Assume the allowance account has an unadjusted balance of nil.)
b. Prepare the current assets section of the statement of financial position for Wendy Ltd, assuming that In addition to the receivables it has cash of $90 000, Inventory of $130 000, and prepaid expenses of $13 000.