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Question - The following transactions occurred over the months of September to December at Nicole's Getaway Spa (NGS).
September Sold spa merchandise to Ashley Welch Beauty for $1,550 on account; the cost of these goods to NGS was $800. October Sold merchandise to Kelly Fast Nail Gallery for $350 on account; the cost of these goods to NGS was $150. November Sold merchandise to Raea Gooding Wellness for $200 on account; the cost of these goods to NGS was $140. December Received $1,050 from Ashley Welch Beauty for payment on its account.
Estimate the Allowance for Doubtful Accounts required at December 31, assuming the only receivables outstanding at December 31 arise from the transactions listed above. NGS uses the aging of accounts receivable method with the following uncollectible rates: one month, 2%; two months, 5%; three months, 20%; more than three months, 35%.
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