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, 2011: Days Past Due Customer Balance Not Past Due 1-30 31-60 61-90 91-120 over 120 26,700 23,800 18,000 Subtotals 720,400 399,800 172,900 79,200 The following accounts were unintentionally omitted from the aging schedule: Customer Due Date Balance $3,000 Arcade Beauty Creative Images Excel Hair Products May 28, 20Y1 Sept. 7, 20Y1 6,200 800 Oct. 17, 2011 Oct. 24, 2011 First Class Hair Care 2,100 Golden Images Nov. 23, 2011 700 Oh The Hair Nov. 29, 2011 3,600 2,300 One Stop Hair Designs Dec. 2, 2011 Jan. 5, 2012 Visions Hair and Nail 7,600 Wig Creations has a past history of uncollectible accounts by age category, as follows: Age Class Percent Uncollectible Age Class Percent Uncollectible Not past due 2 % 1-30 days past due 4 31-60 days past due 12 18 40 61-90 days past due 91-120 days past due Over 120 days past due Required: 80 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, 2011 days Creative Images Sept. 7, 2011 days Excel Hair Products Oct. 17, 2011 days First Class Hair Care Oct. 24, 2011 days Golden Images Nov. 23, 2011 days Oh The Hair Nov. 29, 2011 days One Stop Hair Designs Dec, 2, 20Y1 days Visions Hair and 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 December 31, 20Y1 Customer Not Past Days Past Days Past Due Days Past Due Days Past Due Balance Days Past Due Due Due 1-30 31-60 61-90 91-120 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 Nall 100000" 040 Do do d. looma Dodo' | Total 12% 29 18% 80% 4096 Percent uncollectible Estimate of uncollectible accounts Total Percent uncollectible 2% 4% 12% 1896 4096 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 $1,760 before adjustment on December 3 2011. 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 owner's capital account would be by because bad debt expense would be and net income by on the income statement
