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) 3 percent, (b) 9 percent, and (c) 28 percent, respectively. At December 31, 2022 (end of the current accounting year), the Accounts Receivable balance was $48,700 and the Allowance for Doubtful Accounts balance was $920 (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, 2022, follow: Date 03/11/2021 06/30/2021 01/31/2022 Date 02/28/2022 04/15/2022 11/30/2022 Date 11/30/2022 12/15/2022 Date 03/02/2020 04/15/2020 09/01/2021 10/15/2021 02/01/2022 03/01/2022 12/31/2022 Date 12/30/2022 B. Brown-Account Receivable Explanation Sale Collection Collection Explanation Sale Collection Collection Sale Explanation Collection Sale Explanation Sale D. Donalds-Account Receivable Collection Sale Collection Sale Collection Sale Debit 13,000 N. Napier-Account Receivable Debit 21,000 Explanation Debit 8,000 S. Strothers-Account Receivable Debit 4,000 9,000 Credit 21,000 3,000 3,800 4,000 Credit Debit 4,000 8,000 6,000 Credit 1,000 Credit 4,000 4,500 T. Thomas-Account Receivable 5,000 Credit Balance 13,000 10,000 6,200 Balance 21,000 13,000 7,000 Balance 8,000 7,000 Balance 4,000 0 9,000 4,500 25,500 20,500 24,500 Balance 4,000
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) 3 percent, (b) 9 percent, and (c) 28 percent, respectively. At December 31, 2022 (end of the current accounting year), the Accounts Receivable balance was $48,700 and the Allowance for Doubtful Accounts balance was $920 (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, 2022, follow: Date 03/11/2021 06/30/2021 01/31/2022 Date 02/28/2022 04/15/2022 11/30/2022 Date 11/30/2022 12/15/2022 Date 03/02/2020 04/15/2020 09/01/2021 10/15/2021 02/01/2022 03/01/2022 12/31/2022 Date 12/30/2022 B. Brown-Account Receivable Explanation Sale Collection Collection Explanation Sale Collection Collection Sale Explanation Collection Sale Explanation Sale D. Donalds-Account Receivable Collection Sale Collection Sale Collection Sale Debit 13,000 N. Napier-Account Receivable Debit 21,000 Explanation Debit 8,000 S. Strothers-Account Receivable Debit 4,000 9,000 Credit 21,000 3,000 3,800 4,000 Credit Debit 4,000 8,000 6,000 Credit 1,000 Credit 4,000 4,500 T. Thomas-Account Receivable 5,000 Credit Balance 13,000 10,000 6,200 Balance 21,000 13,000 7,000 Balance 8,000 7,000 Balance 4,000 0 9,000 4,500 25,500 20,500 24,500 Balance 4,000
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
Related questions
Concept explainers
Bad Debts
At the end of the accounting period, a financial statement is prepared by every company, then at that time while preparing the financial statement, the company determines among its total receivable amount how much portion of receivables is collected by the company during that accounting period.
Accounts Receivable
The word “account receivable” means the payment is yet to be made for the work that is already done. Generally, each and every business sells its goods and services either in cash or in credit. So, when the goods are sold on credit account receivable arise which means the company is going to get the payment from its customer to whom the goods are sold on credit. Usually, the credit period may be for a very short period of time and in some rare cases it takes a year.
Question
Problem is in the first attachment and the question that needs to be answered is in the second screenshot/
Transcribed Image Text:Required:
1. Compute the total accounts receivable in each age category.
2. Compute the estimated uncollectible amount for each age category and in total.
Complete this question by entering your answers in the tabs below.
Required 1 Required 2
Compute the total accounts receivable in each age category.
Age
Not yet due
Up to one year past due
More than one year past due
Total accounts receivable
Amount
Transcribed Image Text: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) 3 percent, (b) 9 percent, and (c) 28 percent, respectively.
At December 31, 2022 (end of the current accounting year), the Accounts Receivable balance was $48,700 and the
Allowance for Doubtful Accounts balance was $920 (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, 2022, follow:
Date
03/11/2021
06/30/2021
01/31/2022
Date
02/28/2022
04/15/2022
11/30/2022
Date
11/30/2022
12/15/2022
Date
03/02/2020
04/15/2020
09/01/2021
10/15/2021
02/01/2022
03/01/2022
12/31/2022
Date
12/30/2022
B. Brown-Account Receivable
Explanation
Sale
Collection
Collection
Explanation
Sale
Collection
Collection
Sale
Explanation
Collection
Sale
Explanation
Sale
D. Donalds-Account Receivable
Collection
Sale
Collection
Sale
Collection
Sale
Debit
13,000
N. Napier-Account Receivable
Debit
21,000
Explanation
Debit
8,000
S. Strothers-Account Receivable
Debit
4,000
9,000
21,000
Credit
4,000
3,000
3,800
Debit
Credit
4,000
8,000
6,000
Credit
1,000
Credit
4,000
T. Thomas-Account Receivable
4,500
5,000
Credit
Balance
13,000
10,000
6,200
Balance
21,000
13,000
7,000
Balance
8,000
7,000
Balance
4,000
0
9,000
4,500
25,500
20,500
24,500
Balance
4,000
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