4. Oceanside Company uses the balance sheet approach in estimating uncollectible accounts expense. Its Allowance for Doubtful Accounts has a $2,200 credit balance prior to adjusting entries. It has just completed an aging analysis of accounts receivable at December 31, Year 1. This analysis disclosed the following information: Not yet due 1-30 days past due 31-60 past due Age Group Total a. $129,000. b. $61,000. c. $2,790. d. $3,810 $ 72,000 $ 34,000 $ 23,000 Percentage Considered Uncollectible 1% 3% 9% What is the appropriate balance for Oceanside's Allowance for Doubtful Accounts at December 31, Year 1?
Bad Debts
At the end of the accounting period, a financial statement is prepared by every company, then at that time while preparing the financial statement, the company determines among its total receivable amount how much portion of receivables is collected by the company during that accounting period.
Accounts Receivable
The word “account receivable” means the payment is yet to be made for the work that is already done. Generally, each and every business sells its goods and services either in cash or in credit. So, when the goods are sold on credit account receivable arise which means the company is going to get the payment from its customer to whom the goods are sold on credit. Usually, the credit period may be for a very short period of time and in some rare cases it takes a year.
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