Aging of Receivables; estimating allowance for doubtful accounts

Aging of receivables; estimating allowance for doubtful accounts

Fishy Fish company supplies flies and fishing gear to sporting goods stores and outfitters throughout the western United States. The accounts receivable clerk for Fishy Fish prepared the following partially completed aging of receivables schedule as of the end of business on December 31, 2015:

	A	B	C	D	E	F	G	H
1			Not past Due	Days Past Due
2
3	Customer	Balance		1 30	31 60	61 90	91 120	Over 120
4	AAA Outitters	20,000	20,000
5	Brown Trout Fly Shop	7,500			7,500
30	Zigs Fish Adventures	4,000		4,000
	Subtotals	1,300,000	750,000	290,000	120,000	40,000	20,000	80,000

The following accounts were unintentionally omitted from the aging schedule:

Customer	Due Date	Balance
Adams Sports & Files	May 22, 2015	$5,000
Blue Dun Flies	Oct. 10, 2015	4,900
Cicada Fish Co.	Sept. 29, 2015	8,400
Deschutes Sports	Oct 20, 2015	7,000
Green River Sports	Nov 7, 2015	3,500
Smith River Co	Nov 28, 2015	2,400
Western Trout Company	Dec 7, 2015	6,800
Wolfe Sports	Jan 20, 2016	4,400

Fishy Fish has a past history of uncollectible accounts by age category, as follows

Age Class	Percentage Uncollectible
Not pass due	1%
1 30 days past due	2
31 60 days past due	10
61 90 days past due	30
91 120 days past due	40
Over 120 days past due	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 Fishy Fish Company has a debit balance of $3,600 before adjustment of December 31, 2015. Journalize the adjusting entry for uncollectible accounts.

5. Assume that the adjusting entry in (4) was inadvertently omitted, how would the omission affect the balance sheet and income statement?