o Intermediate Accounting 16e l System Announcements Grace P

o, Intermediate Accounting, 16e l System Announcements Grace Period: 1 days left I CALCULATOR PRINTER VERSION | BACK NEXT Problem 7-3 (Part Level Submission) Whispering Corporation operates in an industry that has a high rate of bad debts. Before any year-end adjustments, the balance in Whispering\'s Accounts Receivable account was $591,300 and Allowance for Doubtful Accounts had a credit balance of $40,920. 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 $312,600 110,600 87,800 42,600 21,900 15,800 Collection 0.97 0.90 0.86 0.82 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 s Click if you would like to Show Work for this question: Open Show Work SAVE FOR LATER SUBMIT ANSWER Attempts: 0 of 3 used

Solution

Solution:

Accounts receivables to be written off = $15,800

Balance for allowance for doubtful accounts at year end = $65,615 - $15,800 = $49,815

Computation of Allowance for Uncollectible Accounts
Days Account Outstanding	Amount	% Uncollectible	Required Allowance for bad debts
Less than 16 days	$312,600.00	3%	$9,378.00
Between 16 and 30 days	$110,600.00	10%	$11,060.00
Between 31 and 45 days	$87,800.00	14%	$12,292.00
Between 46 and 60 days	$42,600.00	18%	$7,668.00
Between 61 and 75 days	$21,900.00	43%	$9,417.00
Over 75 days	$15,800.00	100%	$15,800.00
Total	$591,300.00		$65,615.00