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 $601,400 and the Allowance for Doubtful Accounts had a credit balance of $41,500. 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 |
|
$316,400 |
|
0.97 |
| Between 16 and 30 days |
|
116,800 |
|
0.91 |
| Between 31 and 45 days |
|
81,900 |
|
0.85 |
| Between 46 and 60 days |
|
42,900 |
|
0.82 |
| Between 61 and 75 days |
|
27,100 |
|
0.56 |
| Over 75 days |
|
16,300 |
|
00
1.What is the appropriate balance for Allowance for Doubtful Accounts at year-end
2. Show how accounts receivable would be presented on the balance sheet.
3. What is the dollar effect of the year-end bad debt adjustment on the before-tax income
|