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Blue Skles Equipment Company uses the aging approach to estimate bad debt expense at the end of each accounting year. Credit sales occur frequently on
Blue Skles Equipment Company uses the aging approach to estimate bad debt expense at the end of each accounting year. Credit sales occur frequently on terms 1/60. The balance of each account receivable is aged on the basis of three time periods as follows: (1) not yet due, (2) up to one year past due, and (3) more than one year past due. Experience has shown that for each age group, the average loss rate on the amount of the recevable at year-end due to uncollectibility is (a) 4 percent, (b) 13 percent, and (c) 31 percent, respectively. At December 31, 2019 (end of the current accounting year), the Accounts Receivable balance was $49,800 and the Allowance for Doubtful Accounts balance was $1,110 (credit). In determining which accounts have been paid the company applies collections to the oldest sales first. To simplify, only five customer accounts are used; the details of each on December 31, 2019, follow: 1. Brown-Account Receivable Explanation Debit Balance Sale Collection 01/31/2019 Collection 3,800 5, 100 Credit Date 03/11/2018 06/30/2018 13,200 13,200 8,900 4,300 Date 02/28/2019 04/15/2019 11/30/2019 D. Donalds-Account Receivable Explanation Debit Credit Sale 22,200 Collection 7, 800 Collection 4,600 Balance 22,200 14,400 9,800 Date 11/30/2019 12/15/2019 N. Napier-Account Receivable Explanation Debit Credit Sale 8,000 Collection 1,800 Balance 8,000 6,200 Date 03/02/2017 04/15/2017 09/01/2018 10/15/2018 02/01/2019 03/01/2019 12/31/2019 S. Strothers-Account Receivable Explanation Debit Credit Sale 4,100 Collection 4,100 Sale 9,900 Collection 4,900 Sale 21,800 Collection 6,500 Sale 2,500 Balance 4,100 0 9,900 5,000 26,800 20,300 22,800 Date 12/30/2019 T. Thomas-Account Receivable Explanation Debit Credit Sale 5,900 Balance 5,900 Required: 1. Compute the total accounts receivable in each age category. Amount Not yet due Up to one year past due More than one year past due Total accounts receivable $
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