Question: Potter Stables uses the aging method to estimate its bad debts. Sherman Potter, the company president, has given you the following aging of accounts receivable

Potter Stables uses the aging method to estimate its bad debts. Sherman Potter, the company president, has given you the following aging of accounts receivable as of December 31, 2009, along with the historical probabilities that the account balances will not be collected.

Compute total receivables and expected bad debts as of December 31, 2012.

Noncollection Probability Account Age Current 1-45 days past due 46-90 days past due Over 90 days past due Balance S290,000 110,000 68,000 40,000 5% 15%

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