The adjusted trial balance of Fairhaven Trading at December 31, 2025 is shown below.

Account	Debit	Credit
Cash	50,800
Accounts Receivable	54,000
Allowance for Doubtful Accounts		3,800
Inventory	38,500
Prepaid Insurance	2,400
Equipment	66,000
Accumulated Depreciation - Equipment		19,800
Accounts Payable		24,600
Interest Payable		600
Income Taxes Payable		1,500
Notes Payable (due 2028)		18,000
Share Capital - Ordinary		80,000
Retained Earnings (January 1)		33,400
Sales Revenue		290,000
Sales Returns and Allowances	6,000
Cost of Goods Sold	174,000
Salaries and Wages Expense	43,000
Rent Expense	14,400
Bad Debt Expense	2,900
Depreciation Expense	6,600
Insurance Expense	1,200
Interest Expense	1,900
Income Tax Expense	10,000
	471,700	471,700

Instructions:

Prepare a multi-step income statement for the year ended December 31, 2025.
Prepare a classified statement of financial position at December 31, 2025, showing accounts receivable at its gross amount less the allowance for doubtful accounts. (Retained earnings must be updated for the year's net income; no dividends were declared.)

Receivables — Presenting & Analysing Receivables

1 Receivables — Presenting & Analysing Receivables practice challenge