Problem 7-3 (Part Level Submission) 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 Receivable account was $598,300 and the Allowance for Doubtful Accounts had a credit balance of $43,200. The year-end balance reported in the balance sheet for Allowance for Doubtful Accounts will be based on the aging schedule shown below.

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

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

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

Probability of ays Account Outstandin Less than 16 days Between 16 and 30 days Between 31 and 45 days Between 46 and 60 days Between 61 and 75 days Over 75 days Collection 0.97 0.91 0.87 0.81 0.55 Amount $312,100 117,700 82,800 43,600 27,700 14,400 Assume that accounts with a zero percent chance of collection are intended to be written off