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 866,800 481,100 208,000 95,300 32,100 28,600 21,700 The following accounts were unintentionally omitted from the aging schedule Customer Due Date Balance Arcade Beauty May 28, 20Y1 $2,700 Creative Images Sept 7, 20Y1 5,600 Excel Hair Products Oct 17, 20Y1 700 First Class Hair Care Oct 24, 20Y1 1,800 Golden Images Nov 23, 20Y1 600 Oh That Hair Nov 29, 20Y1 3,200 One Stop Hair Designs Dec 2, 20Y1 2,000 Visions Hair Nail Jan 5, 20Y2 6,800 Wig Creations has a past history of uncollectible accounts by age category, as follows Age Class Percent Uncollectible Not past due 1 1 30 days past due 3 31 60 days past due 12 61 90 days past due 18 91 120 days past due 40 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 Creative Images Sept 7, 20Y1 Excel Hair Products Oct 17, 20Y1 First Class Hair Care Oct 24, 20Y1 Golden Images Nov 23, 20Y1 Oh That Hair Nov 29, 20Y1 One Stop Hair Designs Dec 2, 20Y1 Visions Hair Nail Jan 5, 20Y2 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 That Hair One Stop Hair Designs Visions Hair Nail Total Percent uncollectible 1 3 12 18 40 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 $1,540 before adjustment on December 31, 20Y1 Journalize the adjustment for uncollectible accounts If an amount box does not require an entry, leave it blank

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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	866,800	481,100	208,000	95,300	32,100	28,600	21,700

The following accounts were unintentionally omitted from the aging schedule:

Customer	Due Date		Balance
Arcade Beauty		May 28, 20Y1	$2,700
Creative Images		Sept. 7, 20Y1	5,600
Excel Hair Products		Oct. 17, 20Y1	700
First Class Hair Care		Oct. 24, 20Y1	1,800
Golden Images		Nov. 23, 20Y1	600
Oh That Hair		Nov. 29, 20Y1	3,200
One Stop Hair Designs		Dec. 2, 20Y1	2,000
Visions Hair & Nail		Jan. 5, 20Y2	6,800

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

Age Class	Percent Uncollectible
Not past due	1	%
1-30 days past due	3
31-60 days past due	12
61-90 days past due	18
91-120 days past due	40
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
Creative Images	Sept. 7, 20Y1
Excel Hair Products	Oct. 17, 20Y1
First Class Hair Care	Oct. 24, 20Y1
Golden Images	Nov. 23, 20Y1
Oh That Hair	Nov. 29, 20Y1
One Stop Hair Designs	Dec. 2, 20Y1
Visions Hair & Nail	Jan. 5, 20Y2

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 That Hair
One Stop Hair Designs
Visions Hair & Nail
Total
Percent uncollectible		1%	3%	12%	18%	40%	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 $1,540 before adjustment on December 31, 20Y1. Journalize the adjustment for uncollectible accounts. If an amount box does not require an entry, leave it blank.