Algo Corporation's required balance for the Allowance for Doubtful Accounts as of December 31 is $38,944.
Data and Calculations:
Allowance for doubtful accounts (credit) =$14,500
Age Analysis of Accounts Receivable
Accounts Receivable Age of Accounts Expected Percent Allowance
Receivable Uncollectible for Uncollectible
$ 800,000 Not yet due 1.20% $9,600
$ 320,000 1 to 30 days past due 1.95 6,240
$ 64,000 31 to 60 days past due 6.45 4,128
$ 32,000 61 to 90 days past due 32.50 10,400
$ 12,800 Over 90 days past due 67.00 8,576
$1,228,800 $38,944
Analysis:
Bad Debts $24,444 Allowance for Doubtful Accounts $24,44
Thus, the required balance for the Allowance for Doubtful Accounts of Algo Corporation as of December 31 is $38,944.
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