Solution-Show how ar would be presented on the balance sheet

Show how ar would be presented on the balance sheet

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Reference no: EM13540021

Manilow Corporation operates in an industry that has a high rate of bad debts. Before any year-end adjustments, the balance in Manilow's AR account was $555,000 and the Allowance for Doubtful Accounts had a credit balance of $40,000. The year-end balance reported in the balance sheet for the Allowance for Doubtful Accounts will be based on the aging schedule shown below.

Days Account Outstanding	Amount	Probability of Collection
Less than 16 days	300,000	98%
Between 16 and 30 days	100,000	90%
Between 31 and 45 days	80,000	85%
Between 46 and 60 days	40,000	80%
Between 61 and 75 days	20,000	55%
Over 75 days 15,000		0%

Instructions:

a) What is the appropriate balance for the Allowance for Doubtful Accounts at year-end?

b) Show how AR would be presented on the balance sheet.

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

Reference no: EM13540021

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Show how ar would be presented on the balance sheet

Reference no: EM13540021

Reference no: EM13540021

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