(Learning Objective 4: Using the aging approach to estimate bad debts) At December 31, before any year-end adjustments, the accounts receivable balance of Digital Electronics Company is €150,000. The allowance for doubtful accounts has a €6,800 credit balance. Digital Electronics Company prepares the following aging schedule for accounts receivable:

■ spreadsheet

❙ Requirements 1. Based on the aging of accounts receivable, is the unadjusted balance of the allowance account adequate? Too high? Too low?

2. Make the entry required by the aging schedule. Prepare a T-account for the allowance.

3. Show how Digital Electronics Company will report Accounts Receivable on its December 31 balance sheet.