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 907,000 503,300 217,700 99,800 33,600 29,900 22,700 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 5,900 Excel Hair Products Oct 17, 20Y1 800 First Class Hair Care Oct 24, 20Y1 1,900 Golden Images Nov 23, 20Y1 600 Oh That Hair Nov 29, 20Y1 3,400 One Stop Hair Designs Dec 2, 20Y1 2,200 Visions Hair Nail Jan 5, 20Y2 7,200 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 12 61 90 days past due 18 91 120 days past due 40 Over 120 days past due 75 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 fill in the blank 1f4b5bfff06e00e 1 days Creative Images Sept 7, 20Y1 fill in the blank 1f4b5bfff06e00e 2 days Excel Hair Products Oct 17, 20Y1 fill in the blank 1f4b5bfff06e00e 3 days First Class Hair Care Oct 24, 20Y1 fill in the blank 1f4b5bfff06e00e 4 days Golden Images Nov 23, 20Y1 fill in the blank 1f4b5bfff06e00e 5 days Oh That Hair Nov 29, 20Y1 fill in the blank 1f4b5bfff06e00e 6 days One Stop Hair Designs Dec 2, 20Y1 fill in the blank 1f4b5bfff06e00e 7 days Visions Hair Nail Jan 5, 20Y2 fill in the blank 1f4b5bfff06e00e 8 days Feedback Count the number of days after the due date up to December 31 Do not include the due date in your count Remember that not all months have an equal number of days Add the accounts into the aging schedule based on their number of days past due Apply the respective uncollectible percentage to the total receivables in each days past due group and the not past due group The amount of bad debt expense is affected by the balance in the allowance account Consider the effects of a contra asset not being recorded in terms of the balance sheet equation Consider the effects of an expense not being reported in terms of the income equation 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 fill in the blank a76dce09bf8d072 1 fill in the blank a76dce09bf8d072 2 fill in the blank a76dce09bf8d072 3 fill in the blank a76dce09bf8d072 4 fill in the blank a76dce09bf8d072 5 fill in the blank a76dce09bf8d072 6 fill in the blank a76dce09bf8d072 7 Arcade Beauty fill in the blank a76dce09bf8d072 8 fill in the blank a76dce09bf8d072 9 fill in the blank a76dce09bf8d072 10 fill in the blank a76dce09bf8d072 11 fill in the blank a76dce09bf8d072 12 fill in the blank a76dce09bf8d072 13 fill in the blank a76dce09bf8d072 14 Creative Images fill in the blank a76dce09bf8d072 15 fill in the blank a76dce09bf8d072 16 fill in the blank a76dce09bf8d072 17 fill in the blank a76dce09bf8d072 18 fill in the blank a76dce09bf8d072 19 fill in the blank a76dce09bf8d072 20 fill in the blank a76dce09bf8d072 21 Excel Hair Products fill in the blank a76dce09bf8d072 22 fill in the blank a76dce09bf8d072 23 fill in the blank a76dce09bf8d072 24 fill in the blank a76dce09bf8d072 25 fill in the blank a76dce09bf8d072 26 fill in the blank a76dce09bf8d072 27 fill in the blank a76dce09bf8d072 28 First Class Hair Care fill in the blank a76dce09bf8d072 29 fill in the blank a76dce09bf8d072 30 fill in the blank a76dce09bf8d072 31 fill in the blank a76dce09bf8d072 32 fill in the blank a76dce09bf8d072 33 fill in the blank a76dce09bf8d072 34 fill in the blank a76dce09bf8d072 35 Golden Images fill in the blank a76dce09bf8d072 36 fill in the blank a76dce09bf8d072 37 fill in the blank a76dce09bf8d072 38 fill in the blank a76dce09bf8d072 39 fill in the blank a76dce09bf8d072 40 fill in the blank a76dce09bf8d072 41 fill in the blank a76dce09bf8d072 42 Oh That Hair fill in the blank a76dce09bf8d072 43 fill in the blank a76dce09bf8d072 44 fill in the blank a76dce09bf8d072 45 fill in the blank a76dce09bf8d072 46 fill in the blank a76dce09bf8d072 47 fill in the blank a76dce09bf8d072 48 fill in the blank a76dce09bf8d072 49 One Stop Hair Designs fill in the blank a76dce09bf8d072 50 fill in the blank a76dce09bf8d072 51 fill in the blank a76dce09bf8d072 52 fill in the blank a76dce09bf8d072 53 fill in the blank a76dce09bf8d072 54 fill in the blank a76dce09bf8d072 55 fill in the blank a76dce09bf8d072 56 Visions Hair Nail fill in the blank a76dce09bf8d072 57 fill in the blank a76dce09bf8d072 58 fill in the blank a76dce09bf8d072 59 fill in the blank a76dce09bf8d072 60 fill in the blank a76dce09bf8d072 61 fill in the blank a76dce09bf8d072 62 fill in the blank a76dce09bf8d072 63 Total fill in the blank a76dce09bf8d072 64 fill in the blank a76dce09bf8d072 65 fill in the blank a76dce09bf8d072 66 fill in the blank a76dce09bf8d072 67 fill in the blank a76dce09bf8d072 68 fill in the blank a76dce09bf8d072 69 fill in the blank a76dce09bf8d072 70 Percent uncollectible 2 4 12 18 40 75 Estimate of uncollectible accounts fill in the blank a76dce09bf8d072 71 fill in the blank a76dce09bf8d072 72 fill in the blank a76dce09bf8d072 73 fill in the blank a76dce09bf8d072 74 fill in the blank a76dce09bf8d072 75 fill in the blank a76dce09bf8d072 76 fill in the blank a76dce09bf8d072 77 Feedback Count the number of days after the due date up to December 31 Do not include the due date in your count Remember that not all months have an equal number of days Add the accounts into the aging schedule based on their number of days past due Apply the respective uncollectible percentage to the total receivables in each days past due group and the not past due group The amount of bad debt expense is affected by the balance in the allowance account Consider the effects of a contra asset not being recorded in terms of the balance sheet equation Consider the effects of an expense not being reported in terms of the income equation 3 Estimate the allowance for doubtful accounts, based on the aging of receivables schedule $fill in the blank b3e2effda050076 1 Feedback Count the number of days after the due date up to December 31 Do not include the due date in your count Remember that not all months have an equal number of days Add the accounts into the aging schedule based on their number of days past due Apply the respective uncollectible percentage to the total receivables in each days past due group and the not past due group The amount of bad debt expense is affected by the balance in the allowance account Consider the effects of a contra asset not being recorded in terms of the balance sheet equation Consider the effects of an expense not being reported in terms of the income equation 4 Assume that the allowance for doubtful accounts for Wig Creations has a credit balance of $1,810 before adjustment on December 31, 20Y1 Journalize the adjustment for uncollectible accounts If an amount box does not require an entry, leave it blank Bad Debt Expense fill in the blank a248e901103607e 2 fill in the blank a248e901103607e 3 Allowance for Doubtful Accounts fill in the blank a248e901103607e 5 fill in the blank a248e901103607e 6 Feedback Count the number of days after the due date up to December 31 Do not include the due date in your count Remember that not all months have an equal number of days Add the accounts into the aging schedule based on their number of days past due Apply the respective uncollectible percentage to the total receivables in each days past due group and the not past due group The amount of bad debt expense is affected by the balance in the allowance account Consider the effects of a contra asset not being recorded in terms of the balance sheet equation Consider the effects of an expense not being reported in terms of the income equation 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 $69,631 because the allowance for doubtful accounts would be understated by $69,631 In addition, the owners capital account would be overstated by $69,631 because bad debt expense would be understated and net income overstated by $69,631 on the income statement

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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	907,000	503,300	217,700	99,800	33,600	29,900	22,700

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	5,900
Excel Hair Products		Oct. 17, 20Y1	800
First Class Hair Care		Oct. 24, 20Y1	1,900
Golden Images		Nov. 23, 20Y1	600
Oh That Hair		Nov. 29, 20Y1	3,400
One Stop Hair Designs		Dec. 2, 20Y1	2,200
Visions Hair & Nail		Jan. 5, 20Y2	7,200

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	12
61-90 days past due	18
91-120 days past due	40
Over 120 days past due	75

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	fill in the blank 1f4b5bfff06e00e_1 days
Creative Images	Sept. 7, 20Y1	fill in the blank 1f4b5bfff06e00e_2 days
Excel Hair Products	Oct. 17, 20Y1	fill in the blank 1f4b5bfff06e00e_3 days
First Class Hair Care	Oct. 24, 20Y1	fill in the blank 1f4b5bfff06e00e_4 days
Golden Images	Nov. 23, 20Y1	fill in the blank 1f4b5bfff06e00e_5 days
Oh That Hair	Nov. 29, 20Y1	fill in the blank 1f4b5bfff06e00e_6 days
One Stop Hair Designs	Dec. 2, 20Y1	fill in the blank 1f4b5bfff06e00e_7 days
Visions Hair & Nail	Jan. 5, 20Y2	fill in the blank 1f4b5bfff06e00e_8 days

Feedback

Count the number of days after the due date up to December 31. Do not include the due date in your count. Remember that not all months have an equal number of days.

Add the accounts into the aging schedule based on their number of days past due.

Apply the respective uncollectible percentage to the total receivables in each days past due group and the not past due group.

The amount of bad debt expense is affected by the balance in the allowance account.

Consider the effects of a contra asset not being recorded in terms of the balance sheet equation.

Consider the effects of an expense not being reported in terms of the income equation.

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	fill in the blank a76dce09bf8d072_1	fill in the blank a76dce09bf8d072_2	fill in the blank a76dce09bf8d072_3	fill in the blank a76dce09bf8d072_4	fill in the blank a76dce09bf8d072_5	fill in the blank a76dce09bf8d072_6	fill in the blank a76dce09bf8d072_7
Arcade Beauty	fill in the blank a76dce09bf8d072_8	fill in the blank a76dce09bf8d072_9	fill in the blank a76dce09bf8d072_10	fill in the blank a76dce09bf8d072_11	fill in the blank a76dce09bf8d072_12	fill in the blank a76dce09bf8d072_13	fill in the blank a76dce09bf8d072_14
Creative Images	fill in the blank a76dce09bf8d072_15	fill in the blank a76dce09bf8d072_16	fill in the blank a76dce09bf8d072_17	fill in the blank a76dce09bf8d072_18	fill in the blank a76dce09bf8d072_19	fill in the blank a76dce09bf8d072_20	fill in the blank a76dce09bf8d072_21
Excel Hair Products	fill in the blank a76dce09bf8d072_22	fill in the blank a76dce09bf8d072_23	fill in the blank a76dce09bf8d072_24	fill in the blank a76dce09bf8d072_25	fill in the blank a76dce09bf8d072_26	fill in the blank a76dce09bf8d072_27	fill in the blank a76dce09bf8d072_28
First Class Hair Care	fill in the blank a76dce09bf8d072_29	fill in the blank a76dce09bf8d072_30	fill in the blank a76dce09bf8d072_31	fill in the blank a76dce09bf8d072_32	fill in the blank a76dce09bf8d072_33	fill in the blank a76dce09bf8d072_34	fill in the blank a76dce09bf8d072_35
Golden Images	fill in the blank a76dce09bf8d072_36	fill in the blank a76dce09bf8d072_37	fill in the blank a76dce09bf8d072_38	fill in the blank a76dce09bf8d072_39	fill in the blank a76dce09bf8d072_40	fill in the blank a76dce09bf8d072_41	fill in the blank a76dce09bf8d072_42
Oh That Hair	fill in the blank a76dce09bf8d072_43	fill in the blank a76dce09bf8d072_44	fill in the blank a76dce09bf8d072_45	fill in the blank a76dce09bf8d072_46	fill in the blank a76dce09bf8d072_47	fill in the blank a76dce09bf8d072_48	fill in the blank a76dce09bf8d072_49
One Stop Hair Designs	fill in the blank a76dce09bf8d072_50	fill in the blank a76dce09bf8d072_51	fill in the blank a76dce09bf8d072_52	fill in the blank a76dce09bf8d072_53	fill in the blank a76dce09bf8d072_54	fill in the blank a76dce09bf8d072_55	fill in the blank a76dce09bf8d072_56
Visions Hair & Nail	fill in the blank a76dce09bf8d072_57	fill in the blank a76dce09bf8d072_58	fill in the blank a76dce09bf8d072_59	fill in the blank a76dce09bf8d072_60	fill in the blank a76dce09bf8d072_61	fill in the blank a76dce09bf8d072_62	fill in the blank a76dce09bf8d072_63
Total	fill in the blank a76dce09bf8d072_64	fill in the blank a76dce09bf8d072_65	fill in the blank a76dce09bf8d072_66	fill in the blank a76dce09bf8d072_67	fill in the blank a76dce09bf8d072_68	fill in the blank a76dce09bf8d072_69	fill in the blank a76dce09bf8d072_70
Percent uncollectible		2%	4%	12%	18%	40%	75%
Estimate of uncollectible accounts	fill in the blank a76dce09bf8d072_71	fill in the blank a76dce09bf8d072_72	fill in the blank a76dce09bf8d072_73	fill in the blank a76dce09bf8d072_74	fill in the blank a76dce09bf8d072_75	fill in the blank a76dce09bf8d072_76	fill in the blank a76dce09bf8d072_77

Feedback

Count the number of days after the due date up to December 31. Do not include the due date in your count. Remember that not all months have an equal number of days.

Add the accounts into the aging schedule based on their number of days past due.

Apply the respective uncollectible percentage to the total receivables in each days past due group and the not past due group.

The amount of bad debt expense is affected by the balance in the allowance account.

Consider the effects of a contra asset not being recorded in terms of the balance sheet equation.

Consider the effects of an expense not being reported in terms of the income equation.

3. Estimate the allowance for doubtful accounts, based on the aging of receivables schedule. $fill in the blank b3e2effda050076_1

Feedback

Count the number of days after the due date up to December 31. Do not include the due date in your count. Remember that not all months have an equal number of days.

Add the accounts into the aging schedule based on their number of days past due.

Apply the respective uncollectible percentage to the total receivables in each days past due group and the not past due group.

The amount of bad debt expense is affected by the balance in the allowance account.

Consider the effects of a contra asset not being recorded in terms of the balance sheet equation.

Consider the effects of an expense not being reported in terms of the income equation.

4. Assume that the allowance for doubtful accounts for Wig Creations has a credit balance of $1,810 before adjustment on December 31, 20Y1. Journalize the adjustment for uncollectible accounts. If an amount box does not require an entry, leave it blank.

	Bad Debt Expense	fill in the blank a248e901103607e_2	fill in the blank a248e901103607e_3
	Allowance for Doubtful Accounts	fill in the blank a248e901103607e_5	fill in the blank a248e901103607e_6

Feedback

Count the number of days after the due date up to December 31. Do not include the due date in your count. Remember that not all months have an equal number of days.

Add the accounts into the aging schedule based on their number of days past due.

Apply the respective uncollectible percentage to the total receivables in each days past due group and the not past due group.

The amount of bad debt expense is affected by the balance in the allowance account.

Consider the effects of a contra asset not being recorded in terms of the balance sheet equation.

Consider the effects of an expense not being reported in terms of the income equation.

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 $69,631 because the allowance for doubtful accounts would be understated by $69,631 . In addition, the owners capital account would be overstated by $69,631 because bad debt expense would be understated and net income overstated by $69,631 on the income statement.