Required information P6-3 (Algo) Determining Bad Debt Expense Based on Aging Analysis LO6-2 [The following information applies to the questions displayed below.] 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) 15 percent, and (c) 32 percent, respectively. At December 31, 2019 (end of the current accounting year), the Accounts Receivable balance was $51,500 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 Explanation Debit Date 03/11/2018 Sale 06/30/2018 Collection 01/31/2019 Collection Credit Balance 14,000 14,000 4,000 10,000 2,800 7,200 D. Donalds-Account Receivable Date Explanation 02/28/2019 Sale 04/15/2019 Collection 11/30/2019 Collection Debit Credit Balance 22,200 22,200 7,800 14,400 5,900 8,500 N. Napier-Account Receivable Explanation Debit Date 11/30/2019 Sale 12/15/2019 Collection Credit Balance 9,400 9,400 2,900 6,500 S. Strothers-Account Receivable Date Explanation Debit Credit Balance 03/02/2017 Sale 5,800 5,800 04/15/2017 Collection 5,800 0 09/01/2018 Sale 10,600 10,600 10/15/2018 Collection 3,900 6,700 02/01/2019 Sale 22,300 29,000 03/01/2019 Collection 8,000 21,000 12/31/2019 Sale 2,300 23,300 T. Thomas-Account Receivable Date Explanation 12/30/2019 Sale Debit 6,000 Credit Balance 6,000 P6-3 Part 4 4. Show how the amounts related to accounts receivable should be presented on the 2019 income statement and balance sheet. Complete this question by entering your answers in the tabs below. Income Stat Bal Sheet 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: Income Stat Bal Sheet >