Question: John, Inc. uses the aging method to estimate its bad debts. The information below has been collected regarding the companys outstanding customer accounts and their

John, Inc. uses the aging method to estimate its bad debts. The information below has been collected regarding the companys outstanding customer accounts and their probability of collection:

Account Age Probability of Non-Collection Amount Owed
0-30 days 0.3% $544,000
31-60 days 1.0% 205,700
61-90 days 1.5% 128,000
91-120 days 3.0% 75,500
Over 120 days 15.0% 29,000

The balance in Johns Allowance for Uncollectible Accounts account at year-end before adjusting for a bad debt estimate is $300. Calculate the following amounts for John's Inc.:

  1. Expected bad debt expense
  2. Total balance in accounts receivable
  3. Net realizable value of Thomas accounts receivable

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