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Required information (The following information applies to the questions displayed below.) Blue Skies Equipment Company uses the aging approach to estimate bad debt expense at
Required information (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) 8 percent, (6) 10 percent, and (C) 31 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 $1,100 (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: B. Brown-Account Receivable Explanation Debit Credit 13,400 Collection 4,700 Collection 3,400 Date 03/11/2018 06/30/2018 01/31/2019 Sale Balance 13,400 8,700 5,300 Date 02/28/2019 04/15/2019 11/30/2019 D. Donalds-Account Receivable Explanation Debit Credit Sale 21,500 Collection 7,400 Collection 4,400 Balance 21,500 14,100 9,700 Date 11/30/2019 12/15/2019 N. Napier-Account Receivable Explanation Debit Credit Sale 8,700 Collection 1,700 Balance 8,700 7,000 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 5,800 Collection 5,800 Sale 9,800 Collection 4,700 Sale 21,300 Collection 5,600 Sale 3,000 Balance 5,800 0 9,800 5,100 26,400 20,800 23,800 Date 12/30/2019 T. Thomas-Account Receivable Explanation Debit Credit Sale 4,200 Balance 4,200 Required: 1. Compute the total accounts receivable in each age category. Amount Not yet due Up to one year past due More than one year past due Total accounts receivable $ $ 0 2. 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 due Total $ 0 3. Prepare the adjusting entry for bad debt expense at December 31, 2019. (If no entry is required for a transaction/event, select "No journal entry required" in the first account field.) View transaction list Journal entry worksheet Record the adjusting entry for bad debt expense at December 31, 2019. Note: Enter debits before credits. Transaction General Journal Debit Credit A Record entry Clear entry View general journal
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