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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 Receivables
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 Receivables account was $550,000 and Allowance for Doubtful Accounts will be based on the aging schedule shown below. Days Account Outstanding Less than 16 days Between 16 and 30 Days Between 31 and 45 Days Between 46 and 60 days Between 61 and 75 Dats Over 75 days (to be written off) Amount Probability of Collection 300,000 0.98 100,000 0.9 80,000 0.85 40,000 0.8 20,000 0.55 15,000 0 a. what is the appropiate balance for Allowance for Doubtfu accounts at year-end? b. Show how accounts receivable would be presented on the balance sheet. c. What is the dollar effect of the year-end bad debt adjustment on the before-tax income?
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