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OBJ. 4 PR 9-2A Aging of receivables; estimating allowance for doubtful accounts Trophy Fish Company supplies flies and fishing gear to sporting goods stores and outfit- ters throughout the western United States. The accounts receivable clerk for Trophy Fish prepared the following partially completed aging of receivables schedule as of the end of business on December 31, 20Y6: 1 2 A 3 Customer 4 AAA Outfitters 5 Brown Trout Fly Shop 30 Zigs Fish Adventures 31 Subtotals B C Not Past Due 20,000 20,000 7,500 Balance D 1-30 E F Days Past Due 7,500 G 31-60 61-90 91-120 Over 120 4,000 4,000 1,300,000 750,000 290,000 120,000 H 40,000 20,000 80,000 The following accounts were unintentionally omitted from the aging schedule: Customer Balance $5,000 Adams Sports & Flies Blue Dun Flies Cicada Fish Co. 4,900 8,400 7,000 Due Date May 22, 20Y6 Oct. 10, 20Y6 Sept. 29, 20Y6 Oct. 20, 20Y6 Nov. 7, 20Y6 3,500 Nov. 28, 20Y6 2,400 Dec. 7, 20Y6 6,800 Jan. 20, 20Y7 4,400 Trophy Fish has a past history of uncollectible accounts by age category, as follows: Deschutes Sports Green River Sports Smith River Co. Western Trout Company Wolfe Sports Age Class Not past due 1-30 days past due 31-60 days past due 61-90 days past due 91-120 days past due Over 120 days past due Percent Uncollectible 1% 2 10 30 40 80 Instructions 1. Determine the number of days past due for each of the preceding accounts. 2. Complete the aging of receivables schedule by adding the omitted accounts to the bottom of the schedule and updating the totals. 3. Estimate the allowance for doubtful accounts, based on the aging of receivables schedule. 4. Assume that the allowance for doubtful accounts for Trophy Fish Company has a debit balance of $3,600 before adjustment on December 31, 20Y6. Journalize the adjusting entry for uncollectible accounts. 5. Assuming that the adjusting entry in (4) was inadvertently omitted, how would the omission affect the balance sheet and income statement? Customer Adams Sports and Flies Blue Dun Files Cicada Fish Co. Deschutes Sports Green River Sports Smith River Co. Western Trout Company Wolfe Sports Customer AAA Outfitters Brown Trout Fly Shop Zigs Fish Adventures Subtotals Adams Sports and Flies Blue Dun Files Cicada Fish Co. Deschutes Sports Green River Sports Smith River Co. Western Trout Company Wolfe Sports Totals Percent uncollectible Estimate of uncollectible accounts Due Date May 22, 20Y6 Oct. 10, 20Y6 Sept. 29, 20Y6 Oct. 20, 20Y6 Nov. 7, 20Y6 Nov. 28, 20Y6 Dec. 7, 20Y6 Jan. 20, 20Y7 $ Balance 20,000 7,500 4,000 $ 1,300,000 5,000 4,900 8,400 7,000 3,500 2,400 6,800 4,400 $ 1,342,400 Number of Days Past Due $ Not Past Due 20,000 $ 750,000 Aging of Receivables Schedule December 31, 20Y6 1-30 4,000 $ 290,000 $ 31-60 7,500 $ 120,000 Days Past Due 61 - 90 $ 40,000 $ 91-120 20,000 $ Over 120 80,000 On the balance sheet, the omission would cause: assets to be owner's capital to be On the income statement, the omission would cause: expenses to be net income to be by by by by | ||
