P6-3 (Algo) Determining Bad Debt Expense Based on Aging Analysis L06-2 [The following information applies to the questions displayed below. Blue Skies 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 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 receivable at year-end due to uncollectibility is (a) 9 percent, (b) 9 percent, and (c) 34 percent, respectively. At December 31, 2019 (end of the current accounting year), the Accounts Receivable balance was $50,000 and the Allowance for Doubtful Accounts balance was $1,010 (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: Date 03/11/2018 06/30/2018 01/31/2019 B. Brown-Account Receivable Explanation Debit Credit Sale 13,600 Collection 3,200 Collection 3,500 Balance 13,600 10,400 6,900 Date 02/28/2019 04/15/2019 11/30/2019 D. Donalds-Account Receivablo Explanation Debit Credit Sale 21,200 Collection 8,200 Collection 4,600 Balance 21,200 13,000 8,400 Date 11/30/2019 12/15/2019 N. Napier-Account Receivable Explanation Debit Credit Sale 8,200 Collection 2,200 Balance 8, 200 6,000 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 5,300 Collection 5,300 Sale 10,900 Collection 3,900 Sale 22,200 Collection 8,300 Sale 3,700 Balance 5,300 0 10,900 7,000 29,200 20,900 24, 600 Date 12/30/2019 T. Thomas-Account Receivable Explanation Debit Credit Sale 4,100 Balance 4,100 P6-3 Part 4 4. Show how the amounts related to accounts receivable should be presented on the 2019 income statement and balance Complete this question by entering your answers in the tabs below. Income Stat Bal Sheet Show how the amounts related to accounts receivable should be presented on the 2019 income statement. P6-3 Part 4 4. Show how the amounts related to accounts receivable should be presented on the 2019 income statement and balan Complete this question by entering your answers in the tabs below. Income Stat Bal Sheet Show how the amounts related to accounts receivable should be presented on the 2019 income statement. BLUE SKIES EQUIPMENT COMPANY Income Statement (partial) For the Year Ended December 31, 2019 Operating expenses: Income Star Bal Sheet > P6-3 Part 4 4. Show how the amounts related to accounts receivable should be presented on the 2019 income statement and balance s Complete this question by entering your answers in the tabs below. Income Stat Bal Sheet Show how the amounts related to accounts receivable should be presented on the 2019 balance sheet. (Amounts to be deducted should be indicated by a minus sign.) BLUE SKIES EQUIPMENT COMPANY Balance Sheet (partial) As of December 31, 2019 Current assets:
