Reference no: EM132620009

Larkspur Corporation operates in an industry that has a high rate of bad debts. Before any year-end adjustments, the balance in Larkspur's Accounts Receivable account was $584,900 and Allowance for Doubtful Accounts had a credit balance of $42,500.

The year-end balance reported in the balance sheet for Allowance for Doubtful Accounts will be based on the aging schedule shown below.

Days Account Outstanding        Amount                  Probability of Collection

Less than 16 days                       $312,200                           0.98

Between 16 and 30 days                  111,900                     0.90

Between 31 and 45 days                  86,000                      0.86

Between 46 and 60 days                    40,900                    0.80

Between 61 and 75 days                      19,100                   0.55

Over 75 days (to be written off )          14,800                 0.00

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