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: Not Days Past Due Past Over 120 Customer ABC Beauty Balance 19,600 Due 1-30 31-60 61-90 91-120 19,600 --------------- 7.200 ----------- Angel Wigs 7,200 - - - - - ------- 4,500 ----- 4.500 Zodiac Beauty Subtotals 1,288,600 756,300 282,200 116,900 36,600 20,700 75,900 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 Aug. 17 $5,400 Creative Images Oct. 30 5,300 July 3 8,000 Excel Hair Products First Class Hair Care Golden Images Sept. 8 Nov. 23 Nov. 29 7,500 3,300 2,200 6,700 Oh That Hair One Stop Hair Designs Dec. 7 Visions Hair & Nail Jan. 11 4,300 Wig Creations has 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 1 % 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 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. 17 136 days Creative Images Oct. 30 62 days Excel Hair Products July 3 181 days First Class Hair Care Sept. 8 114 days Golden Images Nov. 23 38 days Oh That Hair Nov. 29 32 days One Stop Hair Designs Dec. 7 24 days Visions Hair & Nail Jan. 11 0 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 Not Past Due 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 Customer ABC Beauty Angel Wigs Balance 19,600 7,200 19,600 7,200 Zodiac Beauty Subtotals Arcade Beauty 4,500 1,288,600 5,400 4,500 282,200 756,300 116,900 36,600 20,700 Creative Images 5,300 5,300 Excel Hair Products 8,000 8,000 First Class Hair Care 7,500 7,500 Golden Images 3,300 Oh That Hair 3,300 2,200 6,700 D 2,200 One Stop Hair Designs 6,700 V Visions Hair & Nail 4,300 4,300 Totals Percent uncollectible (%) 1 % 3 % X % 30 Accounting numeric field Estimate of uncollectible accounts $| X $ 3. Estimate the allowance for doubtful accounts, based on the aging of receivables schedule. 4. Assume that the allowance for doubtful accounts for Wig Creations has a credit balance of $4,500 before adjustment on December 31, 2017. Journalize the adjustment for uncollectible accounts. If an amount box does not require an entry, leave it blank. Dec. 31 X X xx 5. Assume that the adjusting entry in (4) was inadvertently omitted, how would the omission affect the balance sheet and income statement? x beca On the balance sheet, assets would be X by $ X because the allowance for doubtful accounts would be X by $ X. In addition, the stockholders' equity (retained earnings) would be X by $ x because bad debt expense would be X and net income X by $ X on the income statement