Complete solution / explanation

Buitre company used allowance method of accounting for doubtful accounts. The following summary schedule was prepared from an aging of accounts receivable outstanding on December 31.

No of days outstanding of collection___ Amount____ Probability

0-30 days 10,000,000 .98

31-60 days 4,000,000 .90

Over 60 days 2,000,000 .80

The following additional information is available for the current year:

Net credit sales for the year - 80,000,000

Allowance for doubtful accounts: Balance January 1 - 900,000 (cr)

Balance before adjustment, December 31 - 40,000 (dr)

The entity based the estimate of doubtful accounts on aging of accounts receivable.

What amount should be recognize as doubtful expense for the current year?