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, 20Y1 Days Past Due Customer Balance Not Past Due 1 30 31 60 61 90 91 120 over 120 Subtotals 914,200 507,300 219,400 100,600 33,800 30,200 22,900 The following accounts were unintentionally omitted from the aging schedule Customer Due Date Balance Arcade Beauty May 28, 20Y1 $2,800 Creative Images Sept 7, 20Y1 5,800 Excel Hair Products Oct 17, 20Y1 800 First Class Hair Care Oct 24, 20Y1 1,900 Golden Images Nov 23, 20Y1 600 Oh The Hair Nov 29, 20Y1 3,300 One Stop Hair Designs Dec 2, 20Y1 2,100 Visions Hair and Nail Jan 5, 20Y2 7,100 Wig Creations has a past history of uncollectible accounts by age category, as follows Age Class Percent Uncollectible Not past due 2 1 30 days past due 4 31 60 days past due 10 61 90 days past due 15 91 120 days past due 35 Over 120 days past due 80 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 May 28, 20Y1 days Creative Images Sept 7, 20Y1 days Excel Hair Products Oct 17, 20Y1 days First Class Hair Care Oct 24, 20Y1 days Golden Images Nov 23, 20Y1 days Oh The Hair Nov 29, 20Y1 days One Stop Hair Designs Dec 2, 20Y1 days Visions Hair and Nail Jan 5, 20Y2 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, 20Y1 Customer Balance 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 Subtotals Arcade Beauty Creative Images Excel Hair Products First Class Hair Care Golden Images Oh The Hair One Stop Hair Designs Visions Hair and Nail Total Percent uncollectible 2 4 10 15 35 80 Estimate of uncollectible accounts 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 $1,640 before adjustment on December 31, 20Y1 Journalize the adjustment 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 On the balance sheet, assets would be by because the allowance for doubtful accounts would be by In addition, the owners capital account would be by because bad debt expense would be and net income by on the income statement Check My Work Previous

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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.

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, 20Y1:

			Days Past Due
Customer	Balance	Not Past Due	1-30	31-60	61-90	91-120	over 120
Subtotals	914,200	507,300	219,400	100,600	33,800	30,200	22,900

The following accounts were unintentionally omitted from the aging schedule:

Customer		Balance
Arcade Beauty	May 28, 20Y1	$2,800
Creative Images	Sept. 7, 20Y1	5,800
Excel Hair Products	Oct. 17, 20Y1	800
First Class Hair Care	Oct. 24, 20Y1	1,900
Golden Images	Nov. 23, 20Y1	600
Oh The Hair	Nov. 29, 20Y1	3,300
One Stop Hair Designs	Dec. 2, 20Y1	2,100
Visions Hair and Nail	Jan. 5, 20Y2	7,100

Wig Creations has a past history of uncollectible accounts by age category, as follows:

Age Class	Percent Uncollectible
Not past due	2	%
1-30 days past due	4
31-60 days past due	10
61-90 days past due	15
91-120 days past due	35
Over 120 days past due	80

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	May 28, 20Y1	days
Creative Images	Sept. 7, 20Y1	days
Excel Hair Products	Oct. 17, 20Y1	days
First Class Hair Care	Oct. 24, 20Y1	days
Golden Images	Nov. 23, 20Y1	days
Oh The Hair	Nov. 29, 20Y1	days
One Stop Hair Designs	Dec. 2, 20Y1	days
Visions Hair and Nail	Jan. 5, 20Y2	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, 20Y1
Customer	Balance	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
Subtotals
Arcade Beauty
Creative Images
Excel Hair Products
First Class Hair Care
Golden Images
Oh The Hair
One Stop Hair Designs
Visions Hair and Nail
Total
Percent uncollectible		2%	4%	10%	15%	35%	80%
Estimate of uncollectible accounts

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 $1,640 before adjustment on December 31, 20Y1. Journalize the adjustment 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?

On the balance sheet, assets would be by because the allowance for doubtful accounts would be by . In addition, the owners capital account would be by because bad debt expense would be and net income by on the income statement.

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