Problem 7-3 Pronghorn Corporation operates in an industry that has a high rate of bad debts. Before any year-end adjustments, the balance in Pronghorn's Accounts Receivable account was $581,000 and Allowance for Doubtful Accounts had a credit balance of $40,670. The year-end balance reported in the balance sheet for Allowance for Doubtful Accounts will be based on the aging schedule shown below Probability of 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 days Over 75 days Amount $313,600 111,700 82,900 40,200 18,400 14,200 Collection 0.97 0.90 0.86 0.78 0.57 0.00 Assume that accounts with a zero percent chance of collection are intended to be written off 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. PRONGHORN CORPORATION Balance Sheet (Partial) Accounts Receivable Less.Allowance for Doubtful Accounts Allowance for Doubtful Accounts 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 Click if you would like to Show Work for this question: Open Show Work decrease