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Stellar Corporation operates in an industry that has a high rate of bad debts. Before any year-end adjustments, the balance in Stellar's Accounts Receivable account
Stellar Corporation operates in an industry that has a high rate of bad debts. Before any year-end adjustments, the balance in Stellar's Accounts Receivable account was $595,600 and Allowance for Doubtful Accounts had a credit balance of $40,350. The year-end balance reported in the balance sheet for Allowance for Doubtful Accounts will be based on the aging schedule shown below.
Stellar Corporation operates in an industry that has a high rate of bad debts. Before any year-end adjustments, the balance in Stellar's Accounts Rvable account was $595,600 and Allowance for Doubtful Accounts had a credit balance of $40,350. 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 $314,500 119,900 84,800 43,000 19,800 13,600 Collection 0.97 0.90 0.85 0.82 0.53 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 AccountsStep by Step Solution
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