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:

Transcribed image text: 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 1-30 31-60 61-90 91-120 Over 120 Not Past Due 412,700 Subtotals 743,600 178,500 81,800 27,500 24,500 18,600 The following accounts were unintentionally omitted from the aging schedule: Customer Due Date Balance Arcade Beauty May 28, 20Y1 $3,200 Sept. 7, 2011 6,600 Creative Images Excel Hair Products Oct. 17, 2011 900 First Class Hair Care Oct. 24, 20Y1 2,200 Golden Images Nov. 23, 20Y1 700 Oh That Hair Nov. 29, 20Y1 3,800 One Stop Hair Designs Dec. 2, 2011 2,400 Visions Hair & Nail Jan. 5, 2012 8,100 Wig Creations has a past history of uncollectible accounts by age category, as follows: Percent Uncollectible Age Class Not past due 1 % 1-30 days past due 3 31-60 days past due 12 61-an dave naet die 18 eBook Age Class Uncollectible Not past due 1 % 3 1-30 days past due 31-60 days past due 12 61-90 days past due 18 91-120 days past due 40 Over 120 days past due 85 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, 2011 days First Class Hair Care Oct. 24, 2011 days Golden Images Nov. 23, 20Y1 days Oh That Hair Nov. 29, 20Y1 days One Stop Hair Designs Dec. 2, 2011 days Visions Hair & Nail Jan. 5, 2012 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 Check My Work 3 more Check My Work uses remaining. Previous Next Wig Creations Company Aging of Receivables Schedule December 31, 20Y1 Not Past Due Days Days Days Days Past Past Past Past Due 1-30 Due 31-60 Due 61-90 Due 91-120 Days Past Due Over 120 Customer Balance Subtotals Arcade Beauty Creative Images Excel Hair Products First Class Hair Care Golden Images Oh That Hair One Stop Hair Designs Visions Hair & Nail Total Percent uncollectible 1% 3% 12% 18% 40% 85% 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 $1,820 before adjustment on December 31, 2011. Journalize the adjustment for uncollectible accounts. If an amount box does not require an entry, leave it blank. Check My Work 3 more Check My Work uses remaining. Previous Next Creative Images Excel Hair Products First Class Hair Care Golden Images Oh That Hair One Stop Hair Designs Visions Hair & Nail Total Percent uncollectible 1% 3% 12% 18% 40% 85% 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 credit balance of $1,820 before adjustment on December 31, 2011. Journalize the adjustment for uncollectible accounts. If an amount box does not require an entry, leave it blank. 5. Assume that the adjusting entry in (4) was inadvertently omitted, how would the omission affect the balance sheet and income statement? by On the balance sheet, assets would be by In addition, the owner's capital account would be and net income by because the allowance for doubtful accounts would be by because bad debt expense would be on the income statement