Aging of Receivables: Estimating Allowance for Doubtful Accounts Wie Creations Company is wigs and hair care products to beauty salons throughout Texas and the Southwest. The accounts receivable derfor Wig Cheations prated the following partially completed aging of receivables schedule as of the end of business on December 31, 2017 Not Days Past Due Past Customer Balance Due 1-30 31-60 61.00 91-120 Over 120 ABC Beauty 19,200 19,200 Angel Wigs 7,900 7,900 Zodiac Beauty 4,000 4,000 Subtotals 1.289,800 752300 291,500 110,200 35,800 22,200 75,800 The following accounts were unintentionally omitted from the aging schedule. Assume all due dates are for the current year except for Visions Hair Sall, which is due in the next year. Customer Due Date Balance Arcade Beauty Aug 17 $5.400 Creative Images Oct 30 5,300 Excel Hair Products July 8,300 First Class Hair Care Sept. 8 6,900 Golden Images Nov. 23 3.700 Oli That Hair Nov 29 2.300 One Stop Hair Designs Dec. 7 6,300 sions Hair & Jan. 11 4,600 Win Creations as a past history of uncollectible accounts by age category as follows: Wig Creations has a past history of uncollectible accounts by age category, as follows: Age Class Percent Uncollectible Not past due 1 % 2 11 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 32 41 75 Required: 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 Freda Check My Work 2 complete the aging of CIVILIS scheure u dugomite come the LOM TOLCITOQUICID penyem Wig Creations Company Aging of Receivables Schedule December 31, 2047 Not Past Due Balance Days Past Due 1 30 Days Past Due 31-60 Days Past Due 61-90 Days Past Due 91-120 Days Past Due Over 120 19,200 7,900 Customer ABC Beauty Angel Wigs Zodiac Beauty Subtotals Arcade Beauty 19,200 7,900 4,000 1,289,800 4,000 752,300 291,500 110,200 36,800 22,200 76,800 Creative Images Excel Hair Products First Class Hair Care Golden Images Oh That Hair One Stop Hair Designs Visions Hair & Nail Totals Percent uncollectible (86) 96 % 96 % Estimate of uncollectible accounts Add the accounts into the amo schedule based on these number of days past de Apoy the ripective collectie Dercentage to the total receives in each days past due group and not part de group 2. Estimate the allowance for doubtful accounts, based on the aging of receivables schedule The Work Adam accounts into the aging schedule based on their number of days pot du Apply the respective collectie percentage to the total recebe in each days past due group and the not post group 4. Assume that the allowance for doubtful accounts for Wig Creations has a credit balance of $3,500 before adjustment on December 31, 2017. Journalize the adjustment for uncollectible accounts. If an amount box does not require an entry, leave it blank Bad Debt Expense Doc 31 Allowance for Doubtful Accouets Obywy The amount of bad debt rense is flected by the balance in the race account 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 overstated by because the allowance for doubtful accounts would be understated by In addition, the stockholders' equity (retained earnings) would be overstated by because bad debt expense would be understated and not income overstated by on the income statement F
