aging of receivables estimating allowance for doubtful accounts

Aging of Receivables; Estimating Allowance for Doubtful Accounts Wig Creations Company supplies wigs and hair care products to beauty salons throughout Texas and the Southwest. The accounts receivable clerk for Wig Creations prepared the following partially completed aging of receivables schedule as of the end of business on December 31, 2017: Days Past Due Not Past Customer Balance Due 1-30 31-60 61-90 91-120 Over 120 20,200 ABC Beauty Angel Wigs 20,200 7,900 7,900 Aug. 12 Zodiac Beauty 4,100 4,100 Subtotals 1,308,200 741,700 298,600 128,400 36,400 18,700 84,400 The following accounts were unintentionally omitted from the aging schedule. Assume all due dates are for the current year except for Visions Hair & Nail, which is due in the next year Customer Due Date Balance Arcade Beauty $4,500 Creative Images Oct. 30 4,400 Excel Hair Products First Class Hair Care Sept. 7,000 Golden Images Nov. 23 3,700 On That Hair Nov. 29 2,500 One Stop Hair Designs Dec 2 6,700 Visions Hair & Nail Jan 11 3,900 1,100 Previous Next One Stop Hair Designs Dec. 7 6,700 Visions Hair & Nail Jan. 11 3,900 Wig Creations has a past history of uncollectible accounts by age category, as follows: Percent Age Class Uncollectible Not past due 1 % 1-30 days past due 3 31-60 days past due 8 61-90 days past due 28 91-120 days past due 40 Over 120 days past due 79 Required: 1 1. Determine the number of days past due for each of the preceding accounts. If an account is not past due, enter a zero. Customer Due Date Number of Days Past Due Arcade Beauty Aug. 17 days Creative Images Oct. 30 days Excel Hair Products July 3 days First Class Hair Care Sept. 8 days Golden Images Nov, 23 days Oh That Hair Nov. 29 days One Stop Hair Designs Dec. 7 days Visions Hair & Nail Jan. 11 days Visions Hair & Nail Jan. 11 days 2. Complete the aging of receivables schedule by adding the omitted accounts to the bottom of the schedule and updating the totals. If an amount box does not require an entry, leave it blank Wig Creations Company Aging of Receivables Schedule December 31, 2017 Days Past Due 61-90 Days Past Due 91-120 Days Past Due Over 120 Customer ABC Beauty Angel Wigs Zodiac Beauty Subtotals Arcade Beauty Creative Images Not Past Days Past Days Past Balance Due Due 1-30 Due 31-60 20,200 20,200 7,900 7,900 4,100 4,100 1,308,200 741,700 1298,600 128,400 36,400 18,700 84,400 Excel Hair Products First Class Hair Care Golden Images On That Hair One Stop Hair Designs Visions Hair Nail Totals Percent uncollectible (W) 9 Estimate of collectible counts Previous Next First Class Hair Care Golden Images On That Hair One Stop Hair Designs Visions Hair & Nail Totals Percent uncollectible (9) Estimate or uncollectible accounts 3. Estimate the allowance for doubtful accounts, based on the aging of receivables schedule I 4. Assume that the allowance for doubtful accounts for Wig Creations has a credit balance of $4,600 before adjustment on December 31, 2017. Journalize the adjustment for uncollectible accounts. If an amount box does not require an entry, leave it blank Dec. 31 5. Assume that the adjusting entry in (4) was inadvertently omitted, how would the omission affect the balance sheet and income statement? On the balance sheet, assets would be aby s because the allowance for doubtful accounts would be by In addition, the stockholders' equity (retained earnings) would be by & because bad debt expense would be and net income by on the income statement Previous Next