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c 49. Richards Company uses the allowance method of accounting for bad debts.
.02 The following summary schedule was prepared from an aging of accounts receivable outstanding on December 31 of the current year. No. of Days Probability
Outstanding Amount of Collection
0-30 days $500,000 .98
31-60 days 200,000 .90
Over 60 days 100,000 .80 The following additional information is available for the current year: Net credit sales for the year ............................................. $4,000,000
Allowance for Doubtful Accounts:
Balance, January 1 ..................................................... 45,000
(Cf)
Balance before adjustment, December 31 ................. 2,000
Idr) If Richards determines bad debt expense using 1.5 percent of net credit
sales, the net realizable value of accounts receivable on the December 31
balance sheet will be a. $738,000. b. $740,000. c. $742,000. d. $750,000.

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