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 Customer Balance Past Due 20,100 1-30 31-60 61-90 91-120 Over 120 ABC Beauty 20,100 7.800 7.800 Zodiac Beauty 3,700 3,700 Subtotals 1,308,700 757,000 283,900 125,300 41,000 24,200 77,300 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 $5,200 Creative Images Oct 30 5,100 Excel Hair Products July 3 8,200 First Class Hair Care Sept. 8 6.600 Golden Images Nov. 23 3,500 Oh That Hair Nov. 29 2.800 One Stop Hair Designs Dec 7 6,400 Visions Hair Nail Jan 11 4,500 Wig Creations has a past history of uncollectible accounts by age category, as follows: Check My Work One Stop Hair Designs 6,400 Dec. 7 Jan. 11 Visions Hair & Nail 4.500 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 du enter a zero. Customer Due Date Number of Days Past Due Arcade Beauty Aug. 17 16 days days Creative Images Oct. 30 Excel Hair Products July 3 First Class Hair Care Sept. 8 Golden Images Nov. 23 Oh That Hair Nov. 29 Dec. 7 One Stop Hair Designs Visions Hair & Nail Jan. 11 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 Days Past Due 1-30 Due 31-60 Not Past Due Days Past Due 61-90 Days Past Due 91-120 Days Past Due Over 120 Customer ARC Beauty Angel Wigs Balance 20,100 7,800 20,100 2,800 Zodiac Beauty Su 3.700 1.0 00 Arcade Beauty Creative Images Excel Hair Products First Class Hair Care Golden Images Oh That Hair One Stop Hair Designs Visions Hair & Nail Percent uncollectible (5) Estimate of uncollecti o ns 1.346.500 X 5 3. Estimate the allowance for doubtful accounts, based on the aging of receivables schedule. 4,100 x Check My Work Add the accounts into the aging schedule based on their number of days pasto Apply the respective collectible percentage to the total receivables in each days past due group and the not post de group 4. Assume that the allowance for doubtful accounts for Wig Creations has a credit balance of $4,100 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 Bad Debt Expense Allowance for Doubtful Accounts The amount of bad debt expenses affected by the balance in the lowance 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 $ 126,024 X because the allowance for doubtful accounts would be understated by 126,024 X. In addition, the stockholders' equity (retained earnings) would be overstated by 126,024 X because bad debt expense would be understated and net income overstated by $126,024 X on the income statement