Posted: March 2nd, 2014
A Corporation operates in an industry that has a high rate of bad debts. Before any year-end adjustments, the balance in Chatter’s Accounts Receivable account was $389,000 and the Allowance for Doubtful Accounts had a debit balance of $5,000. The year-end balance reported in the balance sheet for the Allowance for Doubtful Accounts will be based on the aging schedule shown below:
Days Account Outstanding | Amount | Probability of Collection |
---|---|---|
Less than 16 days | $293,000 | .97 |
Between 16 and 30 days | $102,000 | .89 |
Between 31 and 45 days | $Â 70,000 | .83 |
Between 46 and 60 days | $Â 55,000 | .76 |
Between 61 and 75 days | $Â 28,000 | .60 |
Over 75 days | $Â Â Â 8,000 | .30 |
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