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, 2017: Days Past Due Not Past Due 19,700 Customer Balance 1-30 3 1-60 61-90 91-120 Over 120 ABC Beauty Angel Wigs 19,700 7,000 7,000 ----............. ............... .................. -------------------------------------- 3,900 Zodiac Beauty Subtotals 3,900 298,500 1,321,000 753,700 124,900 43,800 22,100 78,000 The following accounts were unintentionally omitted from the aging schedule. Assume all due dates are for the current year except for Visions Hair & Nail, which is due in the next year. Customer Due Date Balance Arcade Beauty Aug. 17 $4,500 Creative Images Oct. 30 5,300 Excel Hair Products July 3 8,700 First Class Hair Care Sept. 8 6,900 Golden Images Nov. 23 3,100 Oh That Hair Nov. 29 2,000 One Stop Hair Designs Dec. 7 6,500 Visions Hair & Nail Jan. 11 3,900 Wig Creations has a past history of uncollectible accounts by age category, as follows: Age Class Percent 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 Due Date Number of Days Past Due Arcade Beauty Aug. 17 days days Creative Images Oct. 30 Excel Hair Products July 3 days First Class Hair Care Sept. 8 days Golden Images Oh That Hair Nov. 23 Nov. 29 days days days One Stop Hair Designs Dec. Visions Hair & Nail Jan. 11 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, 2017 Not Past Days Past Days Past Days Past Days Past Days Past Customer Balance Due Due 1-30 Due 31-60 Due 61-90 Due 91-120 Due Over 120 ABC Beauty 19,700 19,700 Angel Wigs 7,000 7,000 Zodiac Beauty Subtotals Arcade Beauty 1,321,000 753,700 3900 298,500 1,321,000 753,700 298,500 124,900 43,800 22,100 Creative Images Excel Hair Products First Class Hair Care Golden Images Oh That Hair One Stop Hair Designs Visions Hair & Nail Totals Percent uncollectible (%) 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 $3,400 before adjustment on December 31, 2017. Journalize the adjustment for uncollectible accounts. If an amount box does not require an entry, leave it blank. Dec. 31 5. Assume that the adjusting entry in (4) was inadvertently omitted, how would the omission affect the balance sheet and income statement? by $ On the balance sheet, assets would be earnings) would be by $ because the allowance for doubtful accounts would be because bad debt expense would be and net income In addition, the stockholders' equity (retained on the income statement. by $ by SL