Green Pastures Equipment Company uses the aging approach to estimate bad debt expense at the end of each accounting year. Credit sales occur frequently on terms n/60. The balance of each accounts 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 bad debt rate on the amounts receivable at year-end due to uncollectibility are (1) 1 percent, (2) 5 percent, and (3) 30 percent, respectively. At December 31, 2020 (end of the current fiscal year), the accounts receivable balance was $43,000, and the unadjusted balance of the allowance for doubtful accounts was $1,020 (credit). In determining which accounts have been paid, the company applies collections to the oldest sales first. To simplify, the accounts of only five customers are used; the details of each are given below:

The company determined in 2020 that any receivables which date back to sales made prior to 2019 are deemed to be uncollectible.

Required:

1. Prepare an analysis of aged accounts receivable.

2. Compute the estimated uncollectible amount for each age category and in total.

3. Prepare the necessary journal entries to adjust the accounts receivable account and to recognize the bad debt expense at December 31, 2020.

4. Show how the amounts related to accounts receivable should be presented on the statement of earnings for 2020 and the statement of financial position at December 31, 2020.

Debit Credit Balance 13,000 4,000 3,000 13,000 9,000 6,000 22,000 10,000 7,000 22,000 12,000 5,000 9,000 Date Explanation B. Brown Account Receivable 11/3/2019 Sale 30/6/2019 Collection 31/1/2020 Collection D. Di LellaAccount Receivable 28/2/2020 Sale 15/4/2020 Collection 30/11/2020 Collection N. Gidda-Account Receivable 30/11/2020 Sale 15/12/2020 Collection S. KavourisAccount Receivable 1/2/2017 Sale 1/3/2017 Collection 2/3/2018 Sale 15/4/2018 Collection 1/9/2019 Sale 15/10/2019 Collection 31/12/2020 Sale T. Patel Account Receivable 30/12/2020 Sale 9,000 7,000 2,000 19,000 5,000 6,000 8,000 19,000 14,000 20,000 12,000 22,000 14,000 18,000 10,000 8,000 4,000 7,000 7,000