Sunshine Corp. produces and distributes umbrellas around the world to both wholesalers and direct retailers....
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Sunshine Corp. produces and distributes umbrellas around the world to both wholesalers and direct retailers. Sunshine Corp. sells most of the products on credit to its customers. Sunshine Corp. applies IFRS. The December 31, 2023 aged receivables report is as follows:
a) 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.
b) Prepare the required year-end journal entry to recognize Loss on Impairment.
\begin{tabular}{lcc} & \% Estimate of & \begin{tabular}{c} Amount \\ Uncollectable \end{tabular} \\ 0 to 30 & 2% & \begin{tabular}{c} Outstanding at \\ Dec 31, 2023 \end{tabular} \\ 31 to 60 & 5% & $225,000 \\ 61 to 90 & 8% & 175,000 \\ Over 90 & 20% & 57,000 \\ & 25,000 \end{tabular}
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