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, 20Y1:

			Days Past Due
Customer	Balance	Not Past Due	1-30	31-60	61-90	91-120	Over 120
Subtotals	645,800	358,500	155,000	71,000	23,900	21,300	16,100

The following accounts were unintentionally omitted from the aging schedule:

Customer	Due Date		Balance
Arcade Beauty		May 28, 20Y1	$2,600
Creative Images		Sept. 7, 20Y1	5,400
Excel Hair Products		Oct. 17, 20Y1	700
First Class Hair Care		Oct. 24, 20Y1	1,800
Golden Images		Nov. 23, 20Y1	600
Oh That Hair		Nov. 29, 20Y1	3,100
One Stop Hair Designs		Dec. 2, 20Y1	2,000
Visions Hair & Nail		Jan. 5, 20Y2	6,600

Wig Creations has a past history of uncollectible accounts by age category, as follows:

Age Class	Percent Uncollectible
Not past due	1	%
1-30 days past due	3
31-60 days past due	10
61-90 days past due	15
91-120 days past due	35
Over 120 days past due	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
Arcade Beauty	May 28, 20Y1	fill in the blank 60fab5041facfe1_1 days
Creative Images	Sept. 7, 20Y1	fill in the blank 60fab5041facfe1_2 days
Excel Hair Products	Oct. 17, 20Y1	fill in the blank 60fab5041facfe1_3 days
First Class Hair Care	Oct. 24, 20Y1	fill in the blank 60fab5041facfe1_4 days
Golden Images	Nov. 23, 20Y1	fill in the blank 60fab5041facfe1_5 days
Oh That Hair	Nov. 29, 20Y1	fill in the blank 60fab5041facfe1_6 days
One Stop Hair Designs	Dec. 2, 20Y1	fill in the blank 60fab5041facfe1_7 days
Visions Hair & Nail	Jan. 5, 20Y2	fill in the blank 60fab5041facfe1_8 days

Feedback

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.

Add the accounts into the aging schedule based on their number of days past due.

Apply the respective uncollectible percentage to the total receivables in each days past due group and the not past due group.

The amount of bad debt expense is affected by the balance in the allowance account.

Consider the effects of a contra asset not being recorded in terms of the balance sheet equation.

Consider the effects of an expense not being reported in terms of the income equation.

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, 20Y1
Customer	Balance	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
Subtotals	fill in the blank ________	fill in the blank ___________	fill in the blank ________	fill in the blank _____________	fill in the blank _____________	fill in the blank ___________	fill in the blank __________
Arcade Beauty
Creative Images
Excel Hair Products
First Class Hair Care
Golden Images
Oh That Hair
One Stop Hair Designs
Visions Hair & Nail
Total
Percent uncollectible		1%	3%	10%	15%	35%	80%
Estimate of uncollectible accounts							Feedback

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.

Add the accounts into the aging schedule based on their number of days past due.

Apply the respective uncollectible percentage to the total receivables in each days past due group and the not past due group.

The amount of bad debt expense is affected by the balance in the allowance account.

Consider the effects of a contra asset not being recorded in terms of the balance sheet equation.

Consider the effects of an expense not being reported in terms of the income equation.

3. Estimate the allowance for doubtful accounts, based on the aging of receivables schedule. $fill in the blank 095bb300a02a007_1

Feedback

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.

Add the accounts into the aging schedule based on their number of days past due.

Apply the respective uncollectible percentage to the total receivables in each days past due group and the not past due group.

The amount of bad debt expense is affected by the balance in the allowance account.

Consider the effects of a contra asset not being recorded in terms of the balance sheet equation.

Consider the effects of an expense not being reported in terms of the income equation.

4. Assume that the allowance for doubtful accounts for Wig Creations has a credit balance of $1,550 before adjustment on December 31, 20Y1. Journalize the adjustment for uncollectible accounts. If an amount box does not require an entry, leave it blank.

Bad Debt Expense

fill in the blank_________________

fill in the blank ________________

Allowance for Doubtful Accounts

fill in the blank_________________

fill in the blank ________________