Managing Bad Debts: Analyzing Allowance for Doubtful Accounts

Days Account OutstandingAmountCollection Less than 16 days$300,0000.98 Between 16 and 30 days100,0000.90 Between 31 and 45 days80,0000.85 Between 46 and 60 days40,0000.80 Between 61 and 75 days20,0000.55 Over 75 days (to be written off)15,0000 Instructions (a)What is the appropriate balance for Allowance for Doubtful Accounts at year-end? Days Account OutstandingAmountLess than 16 days$300,0002%$6,000 Between 16 and 30 days100,00010%$10,000 Between 31 and 45 days80,00015%$12,000 Between 46 and 60 days40,00020%$8,000 Between 61 and 75 days20,00045%$9,000 Over 75 days (to be written off)15,000100%$15,000 Year End Balance of Allowance for doubtful accounts$60,000 (b)Show how accounts receivable would be presented on the balance sheet. Accounts Receivable555,000