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Rose Co. operates in an industry that has a high rate of bad debts. Before any year-end adjustments, the balance in Roses Accounts Receivable was
Rose Co. operates in an industry that has a high rate of bad debts. Before any year-end adjustments, the balance in Roses Accounts Receivable was $4,440,000 and Allowance for Doubtful Accounts had a credit balance of $320,000. The year-end balance reported in the statement of financial position for Allowance for Doubtful Accounts will be based on the following aging schedule.
Days Account Outstanding Less than 16 days 1630 days 31-45 days 46-60 days 61-75 days Over 75 days Amount $2,400,000 800,000 640,000 320,000 160,000 120,000 Probability of Collection .98 90 .85 .80 .55 .00 Required: What is the appropriate balance for Allowance for Doubtful Accounts at year-endStep by Step Solution
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