Required information 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) 10 percent, (6) 10 percent, and (c) 35 percent, respectively. At December 31, 2019 (end of the current accounting year), the Accounts Receivable balance was $50,100 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: Date 03/11/2018 06/30/2018 01/31/2019 B. Brown-Account Receivable Explanation Debit Credit Sale 13,200 Collection 3,500 Collection 4,400 Balance 13,200 9,700 5,300 Date 02/28/2019 04/15/2019 11/30/2019 D. Donalds-Account Receivable Explanation Debit Credit Sale 21,300 Collection 8,300 Collection 4,60 Balance 21,300 13,000 8,400 Date 11/30/2019 12/15/2019 N. Napier-Account Receivable Explanation Debit Credit Sale 9,000 Collection 1,300 Balance 9,000 7,700 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 5,000 Collection 5,000 Sale 10,500 Collection 3,900 Sale 21,900 Collection 7,200 Sale 3,000 Balance 5,000 @ 10,500 6,600 28,500 21,300 24,300 Date 12/30/2019 1. Thomas-Account Receivable Explanation Debit Credit Sale 4,400 Balance 4,400 4. Show how the amounts related to accounts receivable should be presented on the 2019 income statement and balance sheet. 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:
4. Show how the amounts related to accounts receivable should be presented on the 2019 income statement and balance sheet. 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:
