Accounts Receivable

Gibson Co. makes most of its sales on a credit basis. Gibson uses the allowance method to account for credit losses. The company adjusts its accounts just once a year, at the December 31 year-end. Consider the following balances available from the companys unadjusted trial balance at year-end 2019:

Account	Debit	Credit
Accounts receivable	3,496,280
Allowance for doubtful accounts	27,695

Gibson prepared an aging of accounts at year-end 2019, as follows:

Age Group	Amount	Estimated % Uncollectible
0-30 days	$1,813,400	1.0%
31-60 days	729,710	8.8%
61-90 days	497,160	21.3%
91-120 days	264,950	35.9%
Over 120 days	191,060	62.4%
	$3,496,280

On February 26, 2020, Gibson wrote off a sizable receivable balance, amounting to $19,267. Later, on August 11, 2020, Gibson received a check from this customer for $4,350 as partial payment on the past-due account.

4-Year Promissory Note

On December 31, 2019, Gibson received a 4-year promissory note as consideration in an inventory sale transaction on that date. The note is noninterest-bearing, and it calls for the customer to pay the full face value of $42,985 on the December 31, 2023 maturity date. The going market rate of interest for comparable notes on the issue date was 7%.

3-Year Promissory Note

On that same date (December 31, 2019), Gibson received a 3-year, 2%, $66,210 note from another customer as consideration in an inventory sale transaction. This note requires the customer to pay interest annually on December 31 (2020 through 2022). The going market rate of interest for comparable notes on the issue date was 9%.

Gibson uses the effective-interest method to amortize premiums and discounts on all of its promissory notes.