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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) 5 percent, (b) 11 percent, and (c) 31 percent, respectively At December 31, 2014 (end of the current accounting year), the Accounts Receivable balance was $48,500, and the Allowance for Doubtful Accounts balance was $1,090 (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, 2014, follow: B. Brown-Account Receivable Debit Explanation Sale Collection Collection Credit 3/11/2013 6/30/2013 1V31/2014 Balance 13,700 9,800 6,700 13,700 3,900 3,100 D. Donalds-Account Receivable Debit Explanation Sale Collection Collection Credit 2/28/2014 415/2014 11/30/2014 Balance 21,800 13,700 7,700 8,100 6,000 N. Napier-Account Receivable Debit Date Explanation Sale Collection Credit 11/30/2014 1215/2014 Balance 8,300 5,500 8,300 2,800 S. Strothers-Account Receivable Debit Explanation Sale Collection Sale Collection Sale Collection Sale Credit 3/2/2012 4/15/2012 9/1/2013 10/15/2013 2/1/2014 31/2014 12/31/2014 4,800 0,800 22,300 2,800 4,800 4,300 7900 Balance 4,800 0 10,800 6,500 28,800 20,900 23,700 T. Thomas-Account Receivable Debit Date 12/30/2014 Explanation Sale Credit Balance 4,900 4,900 3. Prepare journal entry for bad debt expense at December 31, 2014. (If no entry is required for a in the first account field) View transaction list Journal entry worksheet Record the journal entry for bad debt expense at December 31, 2014. Note: Enter debits before credits. Transaction General Journal Debit Credit Record entry Clear entry View general journal

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