Oceanside Company uses the balance sheet approach in estimating uncollectible accounts expense. It has just completed an aging analysis of accounts receivable at December 31, 2009. This analysis disclosed the following information: $$\begin{array} { | l | c | c | }
\hline & \text { Age } & \text { Percentage } \
\hline & \text { Group } & \text { Considered } \
\hline & \text { Total } & \text { Uncollectible } \
\hline \text { Not yet due } & \$ 52,000 & 1 \% \
\hline 1 - 30 \text { days past due } & \$ 30,000 & 2 \% \
\hline 31 - 60 \text { past due } & \$ 13,000 & 8 \% \
\hline
\end{array}$$ What is the appropriate balance for Oceanside's Allowance for Impairment at December 31, 2009

Question

Oceanside Company uses the balance sheet approach in estimating uncollectible accounts expense. It has just completed an aging analysis of accounts receivable at December 31, 2009. This analysis disclosed the following information: $$\begin{array} { | l | c | c | } 
\hline & \text { Age } & \text { Percentage } \
\hline & \text { Group } & \text { Considered } \
\hline & \text { Total } & \text { Uncollectible } \
\hline \text { Not yet due } & \$ 52,000 & 1 \% \
\hline 1 - 30 \text { days past due } & \$ 30,000 & 2 \% \
\hline 31 - 60 \text { past due } & \$ 13,000 & 8 \% \
\hline
\end{array}$$ What is the appropriate balance for Oceanside's Allowance for Impairment at December 31, 2009

Quizplus · Accepted Answer

The appropriate balance for Oceanside's Allowance for Impairment at December 31, 2009 is $2,160. This is calculated by multiplying the total accounts receivable by the percentage considered uncollectible for each age group and then summing the results. In this case, the total accounts receivable is $95,000, and the percentage considered uncollectible for each age group is 1%, 2%, and 8%. Therefore, the Allowance for Impairment is $52,000 x 1% + $30,000 x 2% + $13,000 x 8% = $2,160.

Oceanside Company Uses the Balance Sheet Approach in Estimating Uncollectible