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: Not Days Past Due Past Customer Balance Due 1-30 31-60 61-90 91-120 Over 120 ABC Beauty 20,300 20,300 Angel Wigs 7,300 7,300 Zodiac Beauty 3,800 3,800 Subtotals 1,298,000 744,600 295,000 115,000 44,600 19,200 79,600 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 Aug. 17 $5,000 Creative Images Oct. 30 4,600 Excel Hair Products July 3 8,200 First Class Hair Care Sept. 8 7,300 Golden Images Nov. 23 4,000 Oh That Hair Nov. 29 2,000 One Stop Hair Designs Dec. 7 6,700 Visions Hair & Nail Jan. 11 4,100 Wig Creations has a past history of uncollectible accounts by age category, as follows: Age Class Percent Uncollectible 1 % 3 3 9 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 32 41 80 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 days Arcade Beauty Creative Images Excel Hair Products Aug. 17 Oct. 30 days July 3 days First Class Hair Care Sept. 8 IlIIIII days Golden Images Nov. 23 days Oh That Hair Nov. 29 days One Stop Hair Designs Dec. 7 days 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 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 Balance Customer 20,300 ABC Beauty Angel Wigs Zodiac Beauty 20,300 7,300 3,800 7,300 3,800 Subtotals 1,298,000 744,600 295,000 115,000 44,600 19,200 79,600 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 (%) 0 0 10% % % % % % 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 $4,000 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? because the allowance for doubtful accounts would be On the balance sheet, assets would be by $ by $ because bad debt expense would be by $ In addition, the stockholders' equity (retained earnings) would be on the income statement. and net income by $