5-67B Determining Bad Debt Expense Using the Aging Method At the beginning of the year, Lennon Electronics had an accounts receivable balance of $34,800 and a balance in the allowance for doubtful accounts of $3,640 (credit). During the year, Len- on had credit sales of $891,420, collected accounts receivable in the amount of $821,400, wrote off $28,990 of accounts receivable, and had the following data for accounts receivable at the end of the period: Accounts Receivable Age Proportion Expected Amount to Default Current $42,350 0.01 1-15 days past due 11,200 0.04 16-45 days past due 9,600 0.09 46-90 days past due 7,200 0.17 Over 90 days past due 5,480 0.30 $75,830 Required: 1. Determine the desired postadjustment balance in allowance for doubtful accounts (round amounts to nearest dollar for each aging category). 2. Determine the balance in allowance for doubtful accounts before the bad debt expense adjusting entry is posted. 3. Compute bad debt expense. 4. Prepare the adjusting entry to record bad debt expense. Case 2-59 Research and Analysis Using the Annual Report Obtain Disney's 2019 annual report either through the Investor Relations" portion of its website (do a web search for Disney investor relations) or go to www.sec.gov and click "Company Filings Search under Filings. Required: 1. Determine the amounts in the accounting equation for the most recent year. 2. What is the normal balance for the following accounts? a. Receivables b. Accounts Payable c. Service Revenue d. Parks, Resorts, and Other Property e. Cost of Services f. Inventories g. Retained Earnings 3. Identify the additional account that is most likely involved when: a. Accounts Payable is decreased. b. Accounts Receivables is increased. c. Common Stock is increased. d. Wages Payable is increased. Case 5-73 Revenue Recognition Beth Rader purchased North Shore Health Club in June 2023. Beth wanted to increase the size of the business by selling 5-year memberships for $2,000, payable at the beginning of the membership period. The normal yearly membership fee is $500. Since few prospec- tive members were expected to have $2,000, Beth arranged for a local bank to provide a $2,000 installment loan to prospective members. By the end of 2023, 250 customers had purchased the 5-year memberships using the loan provided by the bank. Beth prepared her income statement for 2023 and included $500,000 as revenue because the club had collected the entire amount in cash. Beth's accountant objected to the inclusion of the entire $500,000. The accountant argued that the $500,000 should be recognized as revenue as the club provides services for these members during the mem- bership period. Beth countered with a quotation from a part of "Generally Accepted Accounting Principles," Accounting Research Bulletin 43, Chapter 1, Section A, No. 1: "Profit is deemed to be realized when a sale in the ordinary course of business is effected, unless the circumstances are such that collection of the sale price is not reasonably assured." Beth notes that the memberships have been sold and that collection of the selling price has occurred. Therefore, she argues that all $500,000 is revenue in 2023. Required: Write a short statement supporting either Beth or the accountant in this dispute