Green Pastures Equipment Company uses the aging

approach to estimate #970

Green Pastures 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 trade 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 bad debt rate on the amounts receivable at year- end due to
uncollectibility are (1) 1 percent, (2) 5 percent, and (3) 30 percent, respectively. At December
31, 2014 (end of the current accounting year), the trade receivables balance was $ 45,000, and
the unadjusted balance of the allowance for doubtful accounts was $ 1,020 (credit). To simplify,
the accounts of only five customers are used; the details of each are given below:Required:1.
Prepare an aging analysis schedule and complete it. 2. Compute the estimated uncollectible
amount for each age category and in total. 3. Prepare the adjusting entry for bad debt expense
at December 31, 2014. 4. Show how the amounts related to trade receivables should be
presented on the statement of earnings for 2014 and the statement of financial position at
December 31, 2014.View Solution:
Green Pastures Equipment Company uses the aging approach to estimate

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