Use the same facts for Redford Optical Supplies Corporation in 13-33, but assume Red- ford uses the aging method for calculating bad debts expense and the allowance for bad debts. In using the aging method, Redford has found that 2 percent of accounts receiv- able that are not yet past due at the end of any particular year are never collected and 5 percent of accounts receivable that are overdue at year-end are never collected. Of the accounts receivable balance at the end of 2000, 40% are not yet past due.

Required: (1) Compute the dollar amount of bad debts expense that Redford should include on its 2000 income statement.

(2) Show how the net accounts receivable would be reported on Redford’s balance sheet at the end of 2000. TYK-1