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 Subtotals 715,600 The following accounts were unintentionally omitted from the aging schedule: Not Past Due 1-30 31-60 61-90 91-120 over 120 397,200 171,700 78,700 26,500 23,600 17,900 Due Date Balance Arcade Beauty May 28, 20Y1 Sept. 7, 20Y1 Oct. 17, 20Y1 Oct. 24, 20Y1 Nov. 23, 20Y1 Nov. 29, 20Y1 Dec. 2, 20Y1 Jan. 5, 20Y2 $2,800 5,900 800 1,900 600 3,400 2,200 7,200 Creative Images Excel Hair Products First Class Hair Care Golden Images Oh The Hair One Stop Hair Designs Visions Hair and Nail Wig Creations has a past history of uncollectible accounts by age category, as follows: Percent Age Class Not past due 1-30 days past due 31-60 days past due Uncollectible 196 12 Uncollectible 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 due, enter a zero. Customer Arcade Beauty Creative Images Excel Hair Products First Class Hair Care Golden Images Oh The Hair One Stop Hair Designs Visions Hair and Nail 1% 12 18 40 85 Due Date Number of Days Past Due May 28, 20Y1 days days ) days Sept. 7, 20Y1 Oct. 17, 20Y1 Oct. 24, 20Y1 days Nov. 23, 20Y1 days Nov. 29, 201 days days Dec. 2, 20Y1 an. 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 Next Visions Hair and 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 Days Past Due 1- Days Past Due 31 Days Past Due 61 Days Past Due 91- Days Past Due Over 90 Customer Balance Not Past Due 30 60 120 120 Arcade Beauty Creative Images Excel Hair Products First Class Hair Care- Golden Images Oh The Hair One Stop Hair Designs Visions Hair and Nail Total Percent uncollectible Estimate of uncollectible 12% 18% 85% 1% 3% 3. Estimate the allowance for doubtful accounts, based on the aging of receivables schedule. Next L) Excel Hair Products First Class Hair Care Golden Images Oh The Hair One Stop Hair Designs Visions Hair and Nail Total Percent uncollectible Estimate of uncollectible accounts 1% 3% 12% 18% 40% 85% 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 $1,630 before adjustment on December 31, 20Y1. Journlize the adjustment for uncollectible accounts. S. Assume that the adjusting entry in (4) was inadvertently omited, how would the omission affect the balance shet and income statement? On the balance sheet, assets would beby because the allowance for doubtful accounts would be by because bad In addition, the owner's capital account would be and net income , by on the income statement. by debt expense would be
