California Dreams Company has the following information about their Accounts Receivable (the company uses the...
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Accounting
California Dreams Company has the following information about their Accounts Receivable (the company uses the aging method):
| Age | Balance |
| < 31 days | $30,000 |
| 31 - 60 days | $15,000 |
| 61 - 90 days | $5,000 |
| > 90 days | $1,500 |
The accounting manager estimates that balances that are less than 31 days will be 95% collectible, whereas the following data is relevant for older balances: (1) 75% of balances 31-60 days old will be collectible, (2) 60% of balances 61-90 days old will be collectible, and (3) 10% of balances >90 days old will be collectible.
What is the balance that should be in the Allowance for Bad Debts? ____________.
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