Question

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) 4 percent, (b) 10 percent, and (c) 33 percent, respectively.

At December 31, 2019 (end of the current accounting year), the Accounts Receivable balance was $53,200 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, 2019, follow:

B. Brown—Account Receivable
Date	Explanation	Debit	Credit	Balance
03/11/2018	Sale	13,600		13,600
06/30/2018	Collection		3,600	10,000
01/31/2019	Collection		3,100	6,900

D. Donalds—Account Receivable
Date	Explanation	Debit	Credit	Balance
02/28/2019	Sale	22,000		22,000
04/15/2019	Collection		7,300	14,700
11/30/2019	Collection		4,900	9,800

N. Napier—Account Receivable
Date	Explanation	Debit	Credit	Balance
11/30/2019	Sale	8,300		8,300
12/15/2019	Collection		1,700	6,600

S. Strothers—Account Receivable
Date	Explanation	Debit	Credit	Balance
03/02/2017	Sale	4,800		4,800
04/15/2017	Collection		4,800	0
09/01/2018	Sale	10,600		10,600
10/15/2018	Collection		4,300	6,300
02/01/2019	Sale	22,300		28,600
03/01/2019	Collection		7,400	21,200
12/31/2019	Sale	3,900		25,100

T. Thomas—Account Receivable
Date	Explanation	Debit	Credit	Balance
12/30/2019	Sale	4,800		4,800

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

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 accounts receivable

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.)

4. Complete this question by entering your answers in the tabs below.

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:

Balance Sheet

ES EQUIPMENT COMPANY Balance Sheet (partial) As of December 31, 2019 Current assets:

Answer 1

Answer Page no O Tebal accounts receivables in each category Particular Amount | Amount Hot yet due N. Napiers S. Strothers 6600 3900 1. To Thomas 4800 15,300 upto one year part due D. Donalds 9800 S. Strothers 21200 31000 More than one year past due B Brown 6900 6900 Total accounto orcceivable 53,200 @ Erfimated uncollectible amount for each categoor Balance % estimated Amount Not yet due 15,300 4% 612 | 3100 due More than one year past 6900 2277 due 5989 10% opto one gearr past 31000 33% Total

Page No@ * Adjusting entry for bad debt expense at decotena) 2019 - UN Particular Debit Credit 4929 Bad debt expense Allowance for doubtful accounts 4929 Bad debt expense 5989 1060 4929 4 BLE SKIES EQUIPMENT COMPANY portical income statement for the year ended dec 31, 2019 operating expenses: Bad debt provision for the year 4929 Blue skies equipment company balance sheet (partial for the year ended dec 31, 2019 Current assets 53200 Accounts receivables Allowance for doubtful accounts Accounts receivables (net) (5989) 47,211