Cullumber Corporation operates in an industry that has a high rate of bad debts. Before any year-end adjustments, the balance in Cullumber's Accounts Receivable account was $593,600 and Allowance for Doubtful Accounts had a credit balance of $43,020. 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		$312,400			0.97
Between 16 and 30 days		118,400			0.90
Between 31 and 45 days		87,700			0.86
Between 46 and 60 days		41,800			0.80
Between 61 and 75 days		19,200			0.56
Over 75 days (to be written off )		14,100			0.00

What is the appropriate balance for Allowance for Doubtful Accounts at year-end?

Balance for Allowance for Doubtful Accounts

$

Show how accounts receivable would be presented on the balance sheet.

CULLUMBER CORPORATION Balance Sheet (Partial)
Net Accounts ReceivableAllowance for Doubtful AccountsAccounts Receivable			$
AddLess : Allowance for Doubtful AccountsNet Accounts ReceivableAccounts Receivable
Accounts ReceivableAllowance for Doubtful AccountsNet Accounts Receivable			$

What is the dollar effect of the year-end bad debt adjustment on the before-tax income?

Dollar effect of the year-end bad debt adjustment

$ decreaseincrease