Manilow Corporation operates in an industry that has a high rate of bad debts. Before any year-end adjustments, the balance in Manilow's Accounts Receivable account was $591,200 and the Allowance for Doubtful Accounts had a credit balance of $40,200.
The year-end balance reported in the balance sheet for Allowance for Doubtful Accounts will be based on the aging schedule shown below.
|
Days Account Outstanding
|
|
Amount
|
|
Probability of
Collection
|
| Less than 16 days |
|
$313,800 |
|
|
0.97 |
|
| Between 16 and 30 days |
|
113,200 |
|
|
0.91 |
|
| Between 31 and 45 days |
|
81,300 |
|
|
0.87 |
|
| Between 46 and 60 days |
|
42,400 |
|
|
0.82 |
|
| Between 61 and 75 days |
|
24,900 |
|
|
0.55 |
|
| Over 75 days |
|
15,600 |
|
|
00 |
|
Assume that accounts with a zero percent chance of collection are intended to be written off.