Estimating and Recording Bad Debt Estimates and Write-offs; Reporting of Accounts Receivable At December 31, 2020, its annual year-end, the accounts of Sun Systems Inc. show the following. 1. Sales revenue for 2020, $108,000, of which one-sixth was on account. 2. Allowance for doubtful accounts, balance December 31, 2019, $540 credit. 3. Accounts receivable, balance December 31, 2020 (prior to any write-offs of uncollectible accounts during 2020), $10,830. 4. Uncollectible accounts to be written off, December 31, 2020, $630. 5. Aging schedule at December 31, 2020, showing the following breakdown of total accounts receivable, excluding amounts to be written off. Status Not past due Past due 1-60 days Past due over 60 days Required Amount Remainder $2,400 1,800 a. Prepare the 2020 entry to write off the uncollectible accounts. b. Prepare the 2020 adjusting entry to record bad debt expense for each of the following separate assumptions concerning expected bad debt loss rates. Note: Treat each of the following scenarios separately, they are independent of one another. 1. Bad debt expense is based on credit sales, 1.5%. (Hint: See p. 8-19: Alternative to Estimating Net Realizable Value) 2. The Allowance for Doubtful accounts is based on total receivables at year-end, 2.5%. 3. The Allowance for Doubtful accounts is based on aging schedule: not past due, 0.5%; past due 1-60 days, 1%; and past due over 60 days, 8%. 4. Bad debt expense is based on direct write-off method (assume entry in part a has not been recorded). c. Prepare the 2020 balance sheet disclosure relating to accounts receivable for each assumption 1 through 4 of part b. For 4 assumption only, assume that there is a zero balance in the allowance for doubtful accounts on December 31, 2019. a. Date Account Name Dec. 31, 2020 Allowance for Doubtful Accounts Accounts Receivable = = Dr. Cr. 630 630 b. Note: Treat each scenario separately, they are independent of one another. 1. Date Account Name Dec. 31, 2020 Bad Debt Expense Allowance for Doubtful Accounts 2. Date Account Name Dec. 31, 2020 Bad Debt Expense Allowance for Doubtful Accounts + 3. Date Account Name Dec. 31, 2020 Bad Debt Expense Date Allowance for Doubtful Accounts + Account Name Dr. Cr. Dr. Cr. Dr. Cr. Dr. Cr. = Dec. 31, 2020 Bad Debt Expense Allowance for Doubtful Accounts * C. Note: Do not use negative signs with your answers. Balance Sheet, December 31, 2020 1 2 3 4 Accounts receivable $ $ $ $ Less: Allowance for doubtful accounts Accounts receivable, net $ $ $ $