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, 20Y7:

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
ABC Beauty	19,200	19,200
Angel Wigs	7,900			7,900
Zodiac Beauty	4,500		4,500
Subtotals	1,289,500	752,300	284,800	112,800	36,400	19,600	83,600

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	August 17	$4,800
Creative Images	October 30	5,300
Excel Hair Products	July 3	8,700
First Class Hair Care	September 8	7,300
Golden Images	November 23	3,000
Oh That Hair	November 29	1,900
One Stop Hair Designs	December 7	6,500
Visions Hair & Nail	January 11	4,500

Wig Creations has a past history of uncollectible accounts by age category, as follows:

Age Class	Percent Uncollectible
Not past due	1%
1-30 days past due	3
31-60 days past due	9
61-90 days past due	31
91-120 days past due	39
Over 120 days past due	75

Required:

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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	August 17	days
Creative Images	October 30	days
Excel Hair Products	July 3	days
First Class Hair Care	September 8	days
Golden Images	November 23	days
Oh That Hair	November 29	days
One Stop Hair Designs	December 7	days
Visions Hair & Nail	January 11	days

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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, 20Y7

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
ABC Beauty	19,200	19,200
Angel Wigs	7,900			7,900
Zodiac Beauty	4,500		4,500
Subtotals	1,289,500	752,300	284,800	112,800	36,400	19,600	83,600
Arcade Beauty
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	$	$	$	$	$	$	$

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

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4. Assume that the allowance for doubtful accounts for Wig Creations has a credit balance of $4,000 before adjustment on December 31, 20Y7. Journalize the adjustment for uncollectible accounts. If an amount box does not require an entry, leave it blank.

Date	Account	Debit	Credit
Dec. 31	Bad Debt Expense
	Allowance for Doubtful Accounts