Allowance method entries The following transactions were completed by Wild Trout Gallery during the current fiscal year ended December 31: Jan. 19. Reinstated the account of Arlene Gurley, which had been written off in the preceding year as uncollectible. Journalized the receipt of $1,910 cash in full payment of Arlene's account. Apr. 3. Wrote off the $10,940 balance owed by Premier GS Co., which is bankrupt. July 16. Received 30% of the $19,600 balance owed by Hayden Co., a bankrupt business, and wrote off the remainder as uncollectible. Nov. 23. Reinstated the account of Harry Carr, which had been written off two years earlier as uncollectible. Recorded the receipt of $3,115 cash in full payment. Dec. 31. Wrote off the following accounts as uncollectible (compound entry): Cavey Co., $8,230 ; Fogle Co., $2,445; Lake Furniture, $ 6,285; Melinda Shryer, $1,775. Dec. 31. Based on an analysis of the $968,300 of accounts receivable, it was estimated that $42,100 will be uncollectible. Journalized the adjusting entry. Required: 1. Record the January 1 credit balance of $40,100 in a T account presented below in requirement 2b for Allowance for Doubtful Accounts. 2. a. Journalize the transactions. If an amount box does not require an entry, leave it blank. Note: For the December 31 adjusting entry, assume the $968,300 balance in accounts receivable reflects the adjustments made during the year. Jan. 19 II II Jan. 19 Jan. 19 II Apr. 3 July 16 III II Nov. 23 Nov. 23 Dec. 31 101 Dec. 31 2. b. Post each entry that affects the following T accounts and determine the new balances: Allowance for Doubtful Accounts Jan. 1 Balance Dec. 31 Adjusted Balance Bad Debt Expense 3. Determine the expected net realizable value of the accounts receivable as of December 31 (after all of the adjustments and the adjusting entry). $ 4. Assuming that instead of basing the provision for uncollectible accounts on an analysis of receivables, the adjusting entry on December 31 had been based on an estimated expense of 12 of 1% of the sales of $5,980,000 for the year, determine the following: a. Bad debt expense for the year. $ b. Balance in the allowance account after the adjustment of December 31. $ C. Expected net realizable value of the accounts receivable as of December 31 (after all of the adjustments and the adjusting entry). $ 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 20,700 20,700 7,900 Angel Wigs 7,900 Zodiac Beauty 3,900 3,900 Subtotals 1,293,900 741,400 295,000 111,100 44,300 25,000 77,100 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 Aug. 17 $5,000 Oct. 30 4,600 Arcade Beauty Creative Images Excel Hair Products First Class Hair Care Golden Images July 3 8,100 Sept. 8 7,500 Nov. 23 3,600 Oh That Hair Nov. 29 2,700 Oh That Hair Nov. 29 2,700 One Stop Hair Designs Dec. 7 7,200 Visions Hair & Nail Jan. 11 4,600 Wig Creations has a past history of uncollectible accounts by age category, as follows: Age Class Percent Uncollectible Not past due 1 % 3 9 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 38 83 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 Creative Images Oct. 30 lll days Excel Hair Products July 3 days First Class Hair Care Sept. 8 days First Class Hair Care Sept. 8 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 Days Past Due 1-30 Due 31-60 Days Past Due 61-90 Days Past Due 91-120 Days Past Due Over 120 Balance Customer 20,700 ABC Beauty Angel Wigs Zodiac Beauty Subtotals 20,700 7,900 3,900 7,900 3,900 1,293,900 741,400 295,000 111,100 44,300 25,000 77,100 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 $ $ $ 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 $4,400 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 $ because the allowance for doubtful accounts would be by $ In On the balance sheet, assets would be addition, the stockholders' equity (retained earnings) would be by $ on the income statement. by $ because bad debt expense would be and net income