Please avoid solutions in an image format thanks Wildhorse Corporation operates in an industry that has a high rate of bad debts. Before any year-end adjustments, the balance inWildhorse's Accounts Receivable account was $584,900 and Allowance for Doubtful Accounts had a credit balance of $42,500. Theyear-end balance reported in the balance sheet for Allowance for Doubtful Accounts will be based on the aging schedule shown below.Days Account OutstandingLess than 16 daysBetween 16 and 30 daysBetween 31 and 45 daysBetween 46 and 60 daysBetween 61 and 75 daysOver 75 days (to be written off)AmountAccounts Receivable$312,200111.900Net Accounts Receivable86,000eTextbook and Media40,90019,10014,800Probability ofCollection0.98Less : Allowance for Doubtful Accounts0.90What is the appropriate balance for Allowance for Doubtful Accounts at year-end?0.86Balance for allowance for doubtful accountsX Your answer is incorrect.0.80Show how accounts receivable would be presented on the balance sheet.0.550.00WILDHORSE CORPORATIONBalance Sheet (Partial)$Dollar effect of the year-end bad debt adjustment $$58490061049520031What is the dollar effect of the year-end bad debt adjustment on the before-tax income?6104961049increase

Bad debt expense is the amount of accounts receivable that are no longer receivable from customers during the period. Estimated account balance is calculated by multiplying accounts receivable amount by estimated uncollectible %. This amount is used to calculate bad debt expense. Days account outstandingAmountProbability of uncollectibleUncollectible accounts balance(A)(B)(A×B)Less than 16 days$312,2001—0.98= 0.02$6,244Between 16 and 30 days$111,9001—0.90= 0.10$11,190Between 31 and 45 days$86,0001—0.86 = 0.14$12,040Between 46 and 60 days$40,9001—0.80= 0.20$8,180Between 61 and 75 days$19,1001—0.55 = 0.45$8,595Total$46,249Ending balance of accounts receivable= Accounts receivable before adjustments — Account to be written off (Over 75 days) = $584,900 — $14,800= $570,100Ending balance of allowance for Doubtful Account= Estimated uncollectible accounts balance = $46,249Bad debt expense (Bad debt adjustments)= Ending balance of allowance for Doubtful Account + Accounts to be written off — Beginning balance of allowance for Doubtful Account= $46,249 + $14,800 — $42,500 = $18,549This will decrease before tax income.Requirement #1:—Balance of allowance for doubtful accounts = $46,249 Requirement #2:—WILDHORSE CORPORATIONBALANCE SHEET (PARTIAL)Accounts receivable $570,100Less:- Allowance for Doubtful Accounts $46,249Net accounts receivable $523,851Requirement #3:—Dollar effect of the year-end bad debt adjustment = $18,549 Decrease