AC 302 CHAPTER 7 PROBLEM QUESTION 3

AC 302 CHAPTER 7 PROBLEM QUESTION 3
Name				Date		
Instructor				Course		
Intermediate Accounting 14th Edition by Kieso Weygandt and Warfield						
Primer on Using Excel in Accounting by Rex A Schildhouse						
						
P7-3 (Bad-Debt Reporting—Aging) Manilow Corporation operates in an industry that has a high rate of bad debts. Before any year-end adjustments, the balance in Manilow- Accounts Receivable 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 	0.98 	
	Between 16 and 30 days			100,000 	0.90 	
	Between 31 and 45 days			80,000 	0.85 	
	Between 46 and 60 days			40,000 	0.80 	
	Between 61 and 75 days			20,000 	0.55 	
	Over 75 days			15,000 	0.00 	
						
Instructions:						
(a) What is the appropriate balance for the Allowance for Doubtful Accounts at the year-end?						
						
Days Account Outstanding			Amount	Probability of Collection		Doubtful Accts:
0-15 days			$300,000 	0.98 		Formula
16 - 30 days			100,000 	0.90 		Formula
31 - 45 days			80,000 	0.85 		Formula
46 - 60 days			40,000 	0.80 		Formula
61 - 75 days			20,000 	0.55 		Formula
Over 75 days			15,000 	0.00 		Formula
						Formula
						
Enter text answer here.						
						
						
						
						
(b) Show how Accounts Receivable would be presented on the balance sheet.						
	Account Title				Amount	
	Less: Account Title				Amount	
	Text Title					Formula
						
(c) What is the dollar effect of the year-end bad debt adjustment on the before-tax income?						
Enter text answer as desired here.						
						
	Text Title					Amount
	Text explanation as required.					Amount
						
	Text Title					Formula