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	637,400	353,800	153,000	70,100	23,600	21,000	15,900

The following accounts were unintentionally omitted from the aging schedule:

Customer	Due Date		Balance
Arcade Beauty		May 28, 20Y1	$2,500
Creative Images		Sept. 7, 20Y1	5,200
Excel Hair Products		Oct. 17, 20Y1	700
First Class Hair Care		Oct. 24, 20Y1	1,700
Golden Images		Nov. 23, 20Y1	600
Oh That Hair		Nov. 29, 20Y1	3,000
One Stop Hair Designs		Dec. 2, 20Y1	1,900
Visions Hair & Nail		Jan. 5, 20Y2	6,400

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

Age Class	Percent Uncollectible
Not past due	2	%
1-30 days past due	4
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 aeaeef074071076_1 days
Creative Images	Sept. 7, 20Y1	fill in the blank aeaeef074071076_2 days
Excel Hair Products	Oct. 17, 20Y1	fill in the blank aeaeef074071076_3 days
First Class Hair Care	Oct. 24, 20Y1	fill in the blank aeaeef074071076_4 days
Golden Images	Nov. 23, 20Y1	fill in the blank aeaeef074071076_5 days
Oh That Hair	Nov. 29, 20Y1	fill in the blank aeaeef074071076_6 days
One Stop Hair Designs	Dec. 2, 20Y1	fill in the blank aeaeef074071076_7 days
Visions Hair & Nail	Jan. 5, 20Y2	fill in the blank aeaeef074071076_8 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, 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 a32467fb3048000_1	fill in the blank a32467fb3048000_2	fill in the blank a32467fb3048000_3	fill in the blank a32467fb3048000_4	fill in the blank a32467fb3048000_5	fill in the blank a32467fb3048000_6	fill in the blank a32467fb3048000_7
Arcade Beauty	fill in the blank a32467fb3048000_8	fill in the blank a32467fb3048000_9	fill in the blank a32467fb3048000_10	fill in the blank a32467fb3048000_11	fill in the blank a32467fb3048000_12	fill in the blank a32467fb3048000_13	fill in the blank a32467fb3048000_14
Creative Images	fill in the blank a32467fb3048000_15	fill in the blank a32467fb3048000_16	fill in the blank a32467fb3048000_17	fill in the blank a32467fb3048000_18	fill in the blank a32467fb3048000_19	fill in the blank a32467fb3048000_20	fill in the blank a32467fb3048000_21
Excel Hair Products	fill in the blank a32467fb3048000_22	fill in the blank a32467fb3048000_23	fill in the blank a32467fb3048000_24	fill in the blank a32467fb3048000_25	fill in the blank a32467fb3048000_26	fill in the blank a32467fb3048000_27	fill in the blank a32467fb3048000_28
First Class Hair Care	fill in the blank a32467fb3048000_29	fill in the blank a32467fb3048000_30	fill in the blank a32467fb3048000_31	fill in the blank a32467fb3048000_32	fill in the blank a32467fb3048000_33	fill in the blank a32467fb3048000_34	fill in the blank a32467fb3048000_35
Golden Images	fill in the blank a32467fb3048000_36	fill in the blank a32467fb3048000_37	fill in the blank a32467fb3048000_38	fill in the blank a32467fb3048000_39	fill in the blank a32467fb3048000_40	fill in the blank a32467fb3048000_41	fill in the blank a32467fb3048000_42
Oh That Hair	fill in the blank a32467fb3048000_43	fill in the blank a32467fb3048000_44	fill in the blank a32467fb3048000_45	fill in the blank a32467fb3048000_46	fill in the blank a32467fb3048000_47	fill in the blank a32467fb3048000_48	fill in the blank a32467fb3048000_49
One Stop Hair Designs	fill in the blank a32467fb3048000_50	fill in the blank a32467fb3048000_51	fill in the blank a32467fb3048000_52	fill in the blank a32467fb3048000_53	fill in the blank a32467fb3048000_54	fill in the blank a32467fb3048000_55	fill in the blank a32467fb3048000_56
Visions Hair & Nail	fill in the blank a32467fb3048000_57	fill in the blank a32467fb3048000_58	fill in the blank a32467fb3048000_59	fill in the blank a32467fb3048000_60	fill in the blank a32467fb3048000_61	fill in the blank a32467fb3048000_62	fill in the blank a32467fb3048000_63
Total	fill in the blank a32467fb3048000_64	fill in the blank a32467fb3048000_65	fill in the blank a32467fb3048000_66	fill in the blank a32467fb3048000_67	fill in the blank a32467fb3048000_68	fill in the blank a32467fb3048000_69	fill in the blank a32467fb3048000_70
Percent uncollectible		2%	4%	10%	15%	35%	80%
Estimate of uncollectible accounts	fill in the blank a32467fb3048000_71	fill in the blank a32467fb3048000_72	fill in the blank a32467fb3048000_73	fill in the blank a32467fb3048000_74	fill in the blank a32467fb3048000_75	fill in the blank a32467fb3048000_76	fill in the blank a32467fb3048000_77

3. Estimate the allowance for doubtful accounts, based on the aging of receivables schedule. $fill in the blank f7b33efb5f7f02e_1

4. Assume that the allowance for doubtful accounts for Wig Creations has a credit balance of $1,680 before adjustment on December 31, 20Y1. Journalize the adjustment for uncollectible accounts. If an amount box does not require an entry, leave it blank.

	Accounts PayableAccounts ReceivableAllowance for Doubtful AccountsBad Debt ExpenseCash	- Select -	- Select -
	Accounts PayableAccounts ReceivableAllowance for Doubtful AccountsBad Debt ExpenseCash	- Select -	- Select -

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

overstatedunderstated

by

$48,560$46,880$46,900

because the allowance for doubtful accounts would be

overstatedunderstated

by

$48,560$46,880$46,900

. In addition, the owners capital account would be

overstatedunderstated

by

$48,560$46,880$46,900

because bad debt expense would be

overstatedunderstated

and net income

overstatedunderstated

by

$48,560$46,880$46,900

on the income statement.