Smart Electronics sells a diagnostic machine to a hospital with a four-year payment plan. The company would like to estimate the bad debt allowance needed to cover the notes outstanding over the next four years. Estimated lost cash flows and the probability of occurrence for each of the next four years are summarized in the following schedule. The risk-free rate is 2%. (Click the icon to view the schedule.) Requirement What is the estimated bad debt allowance at December 31, 2018? Begin by computing the estimated cash flow loss each year. (Enter all amounts as positive amounts.) Projected Cash Flow Expected Loss from Uncollected Probability of Cash Flow Year Notes Loss Occurring Loss 2019 $ 11,000 65 % 17,000 35 % Total expected cash flow loss in 2019 2020 $ 5,000 25 % 19,000 65 % 25,000 10 % Total expected cash flow loss in 2020 12,000 70 % 2021 $ 18,000 30 % Total expected cash flow loss in 2021 2022 $ 21,000 55 % 39,000 45 % Total expected cash flow loss in 2022