Determining Bad Debt Expense Based on Aging Analysis - 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 uncollectability is ( a ) 2 percent, ( b ) 7 percent, and ( c ) 30 percent, respectively. At December 31, 2011 (end of the current accounting year), the Accounts Receivable balance was $46,700, 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, 2011, follow:

B. Brown—Account Receivable
Date	Explanation	Debit	Credit	Balance
3/11/2010	Sale	13,000	13,000
6/30/2010	Collection	4,000	9,000
1/31/2011	Collection	3,800	5,200
D. Donalds—Account Receivable
2/28/2011	Sale	21,000	21,000
4/15/2011	Collection	8,000	13,000
11/30/2011	Collection	5,000	8,000
N. Napier—Account Receivable
11/30/2011	Sale	8,000	8,000
12/15/2011	Collection	1,000	7,000
S. Strothers—Account Receivable
3/2/2009	Sale	4,000	4,000
4/15/2009	Collection	4,000	–0–
9/1/2010	Sale	9,000	9,000
10/15/2010	Collection	4,500	4,500
2/1/2011	Sale	21,000	25,500
3/1/2011	Collection	5,000	20,500
12/31/2011	Sale	2,000	22,500
T. Thomas—Account Receivable
12/30/2011	Sale	4,000	4,000

Required:

1. Compute the total accounts receivable in each age category.

2. Compute the estimated uncollectible amount for each age category and in total.

3. Give the adjusting entry for bad debt expense at December 31, 2011.

4. Show how the amounts related to accounts receivable should be presented on the 2011 income statement and balance sheet.