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 631,500 350,400 151,600 69,500 23,400 20,800 15,800 The following accounts were unintentionally omitted from the aging schedule: Customer Due Date Balance Arcade Beauty May 28, 20Y1 $3,000 Creative Images Sept. 7, 20Y1 6,300 Excel Hair Products Oct. 17, 20Y1 800 First Class Hair Care Oct. 24, 2011 2,100 Golden Images Nov. 23, 20Y1 700 Oh That Hair Nov. 29, 2011 3,600 One Stop Hair Designs Dec. 2, 20Y1 2,300 Visions Hair & Nail Jan. 5, 20Y2 7,700 Wig Creations has a past history of uncollectible accounts by age category, as follows: Percent Uncollectible Age Class Not past due 2 % 1-30 days past due 4 31-60 days past due 10 61-90 days past due 15 91-120 days past due 35 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. 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, 20Y1 days First Class Hair Care Oct. 24, 20Y1 days Golden Images Nov. 23, 2011 days Oh That Hair Nov. 29, 20Y1 days One Stop Hair Designs Dec. 2, 20Y1 days Visions Hair & Nail Jan. 5, 20Y2 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 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 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 One Stop Hair Designs Visions Hair & Nail Total Percent uncollectible 2% 4% 10% 15% 35% 75% Estimate of uncollectible accounts 3. Estimate the allowance for doubtful accounts, based on the aging receivables schedule. 4. Assume that the allowance for doubtful accounts for Wig Creations has a credit balance of $1,800 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 by On the balance sheet, assets would be by because the allowance for doubtful accounts would be and net income . In addition, the owner's capital account would be on the income statement. because bad debt expense would be by