Trophy Fish Company supplies flies and fishing gear to sporting goods stores and outfitters throughout the western United States. The accounts receivable clerk for Trophy Fish prepared the following partially completed aging of receivables schedule as of the end of business on December 31, 20Y4:

1			Not	Days Past Due	Days Past Due	Days Past Due	Days Past Due	Days Past Due
2			Past
3	Customer	Balance	Due	1-30	31-60	61-90	91-120	Over 120
4	AAA Outfitters	20,900.00	20,900.00
5	Brown Trout Fly Shop	7,000.00			7,000.00
6	~~~~~	~~~~~	~~~~~	~~~~~	~~~~~	~~~~~	~~~~~	~~~~~
7
8	Zigs Fish Adventures	4,000.00		4,000.00
9	Subtotals	1,284,400.00	752,900.00	281,800.00	110,100.00	41,200.00	19,800.00	78,600.00

The following accounts were unintentionally omitted from the aging schedule. Assume all due dates are for the current year except for Wolfe Sports, which is due in the next year.

Customer	Due Date	Balance
Adams Sports & Flies	May 22	$4,600
Blue Dun Flies	Oct. 10	4,900
Cicada Fish Co.	Sept. 29	8,100
Deschutes Sports	Oct. 20	7,000
Green River Sports	Nov. 7	3,300
Smith River Co.	Nov. 28	2,400
Western Trout Company	Dec. 7	7,300
Wolfe Sports	Jan. 20	4,600

Trophy Fish has a past history of uncollectible accounts by age category, as follows:

Age Class	Percent Uncollectible
Not past due	1%
130 days past due	3
3160 days past due	9
6190 days past due	29
91120 days past due	38
Over 120 days past due	75

1.	Determine the number of days past due for each of the preceding accounts. If an account is not past due, enter a zero.
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.
4.	Assume that the allowance for doubtful accounts for Trophy Fish Company has a debit balance of $4,800 before adjustment on December 31. Journalize the adjusting entry for uncollectible accounts. Refer to the Chart of Accounts for exact wording of account titles.
5.	Assume that the adjusting entry in (4) was inadvertently omitted, how would the omission affect the balance sheet and income statement?

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.

Aging of Receivables Schedule

December 31, 20Y4

1				Days Past Due	Days Past Due	Days Past Due	Days Past Due	Days Past Due
2	Customer	Balance	Not Past Due	1-30	31-60	61-90	91-120	Over 120
3	AAA Outfitters	20,900.00	20,900.00
4	Brown Trout Fly Shop	7,000.00			7,000.00
5	~~~~~	~~~~~	~~~~~	~~~~~	~~~~~	~~~~~	~~~~~	~~~~~
6	Zigs Fish Adventures	4,000.00		4,000.00
7	Subtotals	1,284,400.00	752,900.00	281,800.00	110,100.00	41,200.00	19,800.00	78,600.00
8	Adams Sports & Flies
9	Blue Dun Flies
10	Cicada Fish Co.
11	Deschutes Sports
12	Green River Sports
13	Smith River Co.
14	Western Trout Company
15	Wolfe Sports
16	Totals
17	Percentage uncollectible
18	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 Trophy Fish Company has a debit balance of $4,800 before adjustment on December 31. Journalize the adjusting entry for uncollectible accounts. Refer to the Chart of Accounts for exact wording of account titles.

PAGE 10

JOURNAL

ACCOUNTING EQUATION

	DATE	DESCRIPTION	POST. REF.	DEBIT	CREDIT	ASSETS	LIABILITIES	EQUITY
1
2

5. Assume that the adjusting entry in (4) was inadvertently omitted, how would the omission affect the balance sheet and income statement?

On the balance sheet, assets would be_____ by____ because the allowance for doubtful accounts would be____ by____ . In addition, the owners capital account would be_____ by____ because bad debt expense would be____ and net income____ by____on the income statement.

Compare two methods of accounting for uncollectible receivables

Call Systems Company, a telephone service and supply company, has just completed its fourth year of operations. The direct write-off method of recording bad debt expense has been used during the entire period. Because of substantial increases in sales volume and the amount of uncollectible accounts, the company is considering changing to the allowance method. Information is requested as to the effect that an annual provision of 1% of sales would have had on the amount of bad debt expense reported for each of the past four years. It is also considered desirable to know what the balance of Allowance for Doubtful Accounts would have been at the end of each year. The following data have been obtained from the accounts:

			Year of Origin of Accounts Receivable Written Off as Uncollectible
Year	Sales	Uncollectible Accounts Written Off	1	2	3	4
1	$ 900,000	$ 4,500	$4,500
2	1,250,000	9,600	3,000	$6,600
3	1,500,000	12,800	1,000	3,700	$8,100
4	2,200,000	16,550		1,500	4,300	$10,750

1. Assemble the desired data, using the following column headings:

	Bad Debt Expense
Year	Expense Actually Reported	Expense Based on Estimate	Increase (Decrease) in Amount of Expense	Balance of Allowance Account, End of Year
1	$ fill in the blank 1	$ fill in the blank 2	$fill in the blank 3	$fill in the blank 4
2	fill in the blank 5	fill in the blank 6	fill in the blank 7	fill in the blank 8
3	fill in the blank 9	fill in the blank 10	fill in the blank 11	fill in the blank 12
4	fill in the blank 13	fill in the blank 14	fill in the blank 15	fill in the blank 16

2. Experience during the first four years of operations indicated that the receivables were either collected within two years or had to be written off as uncollectible. Does the estimate of 1% of sales appear to be reasonably close to the actual experience with uncollectible accounts originating during the first two years?

YesNo