P6-4 Determining Bad Debt Expense Based on Aging Analysis LO6-3

[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 uncollectability is (a) 8 percent, (b) 11 percent, and (c) 35 percent, respectively.

At December 31, 2014 (end of the current accounting year), the Accounts Receivable balance was $52,600, and the Allowance for Doubtful Accounts balance was $1,060 (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, 2014, follow:

Required: 1

Required: 2

Required: 3

Required: 4

P6-4 Determining Bad Debt Expense Based on Aging Analysis LO6-3 [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 uncollectability is (a) 8 percent, (b) 11 percent, and (c) 35 percent, respectively.At December 31, 2014 (end of the current accounting year), the Accounts Receivable balance was $52,600, and the Allowance for Doubtful Accounts balance was $1,060 (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, 2014, follow:4. Show how the amounts related to accounts receivable should be presented on the 2014 income statement and balance sheet. (Amounts to be deducted should be indicated by a minus sign.)3. Prepare journal entry for bad debt expense at December 31, 2014. (If no entry is required for a transaction/event, select ''No journal entry required'' in the first account field.) Record the journal entry for bad debt expense at December 31, 2014. Transaction General Journal Debit CreditRequired: 42. Compute the estimated uncollectible amount for each age category and in total. Amount Not yet due Up to one year past due More than one year past dueRequired: 3Required: 1. Compute the total accounts receivable in each age category. Amount Not yet due Up to one year past due More than one year pa5t dueRequired: 2 Required: 1