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, 2015:

1

A

B

C

D

E

F

G

H

2

Days Past Due

Days Past Due

Days Past Due

Days Past Due

Days Past Due

3

Customer

Balance

Not Past Due

1-30

31-60

61-90

91-120

Over 120

4

ABC Beauty

15,000.00

15,000.00

5

Angel Wigs

8,000.00

8,000.00

6

~~~~~

~~~~~

~~~~~

~~~~~

~~~~~

~~~~~

~~~~~

~~~~~

7

Zodiac Beauty

3,000.00

3,000.00

8

Subtotals

875,000.00

415,000.00

210,000.00

112,000.00

55,000.00

18,000.00

65,000.00

The following accounts were unintentionally omitted from the aging schedule:

CustomerDue DateBalanceArcade BeautyAug. 17, 2015$10,000Creative ImagesOct. 30, 20158,500Excel Hair ProductsJuly 3, 20157,500First Class Hair CareSept. 8, 20156,600Golden ImagesNov. 23, 20153,600Oh That HairNov. 29, 20151,400One Stop Hair DesignsDec. 7, 20154,000Visions Hair & NailJan. 11, 20169,000Wig Creations has a past history of uncollectible accounts by age category, as follows:

Age ClassPercent UncollectibleNot past due1%1-30 days past due4%31-60 days past due16%61-90 days past due25%91-120 days past due40%Over 120 days past due80%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.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 Wig Creations has a credit balance of $7,375 before adjustment on December 31, 2015. Journalize the adjustment for uncollectible accounts. Refer to the chart of accounts for a listing of the account titles the company uses.5.Assume that the adjusting entry in (4) was inadvertently omitted, how would the omission affect the balance sheet and income statement?Starting Question

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1. Determine the number of days past due for each of the following accounts. If an account is not past due, enter a zero.

CustomerDue DateNumber of Days Past DueArcade BeautyAug. 17, 2015daysCreative ImagesOct. 30, 2015daysExcel Hair ProductsJuly 3, 2015daysFirst Class Hair CareSept. 8, 2015daysGolden ImagesNov. 23, 2015daysOh That HairNov. 29, 2015daysOne Stop Hair DesignsDec. 7, 2015daysVisions Hair & NailJan. 11, 2016daysPoints:

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Count the number of days after the due date up to December 31. Do not include the due date in your count. Remember that not all months have an equal number of days.

Additional Question

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

$

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Journal

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4. Assume that the allowance for doubtful accounts for Wig Creations has a credit balance of $7,375 before adjustment on December 31, 2015. Journalize the adjustment for uncollectible accounts. Refer to the chart of accounts for a listing of the account titles the company uses.

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JOURNAL

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