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Paisley Corporation operates in an industry that has a high rate of bad debt. The year-end balance reported in the balance sheet for the Allowance
Paisley Corporation operates in an industry that has a high rate of bad debt. The year-end balance reported in the balance sheet for the Allowance for Doubtful Accounts will be based on the aging schedule shown below:
Days Account Outstanding Amount Probability of Not Collecting
Less than 30 days $351,600 .05
Between 31 and 60 days 122,400 .10
Between 61 and 90 days 84,000 .20
Between 91 and 120 days 66,000 .30
Over 120 days $ 9,600 .40
Before year-end adjustments, Paisley's Allowance for Doubtful Accounts had a debit balance of $8,000
- What is the appropriate balance for the Allowance for Doubtful Accounts at year-end?
- Show how accounts receivable would be presented on the balance sheet. State the differences between U.S. GAAP and IFRS reporting for accounts receivable.
- What is the year-end bad debt adjustment?
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