PR 9-2B Aging of receivables; estimating allowance for doubtful accounts Obj. 4 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, 2011: Excel A 1 2 3 Customer 4 ABC Beauty 5 Angel Wigs B C D E F G H Not Days Past Due Past Balance Due 1-30 31-60 61-90 91-120 Over 120 15,000 15,000 8,000 8,000 30 Zodiac Beauty 31 Subtotals 3,000 3,000 875,000 415,000 210,000 112,000 55,000 18.000 65,000 The following accounts were unintentionally omitted from the aging schedule: Customer Arcade Beauty Creative Images Excel Hair Products First Class Hair Care Golden Images Oh That Hair One Stop Hair Designs Visions Hair & Nail Due Date Aug. 17, 2011 Oct. 30, 20Y1 July 3, 2011 Sept. 8, 2011 Nov. 23, 20Y1 Nov. 29, 2011 Dec. 7, 2011 Jan. 11, 2012 Balance $10,000 8,500 7,500 6,600 3,600 1,400 4,000 9,000 Visions Hair & Nail Jan. 11, 20Y2 9,000 Wig Creations has a past history of uncollectible accounts by age category, as follows: Age Class 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 Percent Uncollectible 1% 4 16 25 40 80 Instructions 1. Determine the number of days past due for each of the preceding accounts. 2. Complete the aging of receivables schedule by adding the omitted accounts to the bottom of the schedule and updating the totals. 3. Estimate the allowance for doubtful accounts, based on the aging of receivables schedule. Answer 4. Assume that the allowance for doubtful accounts for Wig Creations has a credit balance of $7,375 before adjustment on December 31, 20Y1. Journalize the adjustment for uncollectible accounts. 5. Assuming that the adjusting entry in (4) was inadvertently omitted, how would the omission affect the balance sheet and income statement