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Mani Corporation operates in an industry that has a high rate of bad debts. Before any year-end adjustments, the balance in Mani's Accounts Receivable account
Mani Corporation operates in an industry that has a high rate of bad debts. Before any year-end adjustments, the balance in Mani's Accounts Receivable account was $601,200 and the Allowance for Doubtful Accounts had a credit balance of $40,590. 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 $319,700 0.97
Between 16 and 30 days 116,700 0.90
Between 31 and 45 days 86,800 0.86
Between 46 and 60 days. 43,700 0.80
Between 61 and 75 days. 19,600 0.55
Over 75 days 14,700 0.00
1. What is the appropriate balance for Allowance for Doubtful Accounts at year-end?
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