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	855,000	474,500	205,200	94,100	31,600	28,200	21,400

The following accounts were unintentionally omitted from the aging schedule:

Customer	Due Date		Balance
Arcade Beauty		May 28, 20Y1	$2,700
Creative Images		Sept. 7, 20Y1	5,700
Excel Hair Products		Oct. 17, 20Y1	800
First Class Hair Care		Oct. 24, 20Y1	1,900
Golden Images		Nov. 23, 20Y1	600
Oh That Hair		Nov. 29, 20Y1	3,200
One Stop Hair Designs		Dec. 2, 20Y1	2,100
Visions Hair & Nail		Jan. 5, 20Y2	6,900

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	75

Required:

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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 aaf626f7c02e07c_1 days
Creative Images	Sept. 7, 20Y1	fill in the blank aaf626f7c02e07c_2 days
Excel Hair Products	Oct. 17, 20Y1	fill in the blank aaf626f7c02e07c_3 days
First Class Hair Care	Oct. 24, 20Y1	fill in the blank aaf626f7c02e07c_4 days
Golden Images	Nov. 23, 20Y1	fill in the blank aaf626f7c02e07c_5 days
Oh That Hair	Nov. 29, 20Y1	fill in the blank aaf626f7c02e07c_6 days
One Stop Hair Designs	Dec. 2, 20Y1	fill in the blank aaf626f7c02e07c_7 days
Visions Hair & Nail	Jan. 5, 20Y2	fill in the blank aaf626f7c02e07c_8 days

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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 b048f903d05701e_1	fill in the blank b048f903d05701e_2	fill in the blank b048f903d05701e_3	fill in the blank b048f903d05701e_4	fill in the blank b048f903d05701e_5	fill in the blank b048f903d05701e_6	fill in the blank b048f903d05701e_7
Arcade Beauty	fill in the blank b048f903d05701e_8	fill in the blank b048f903d05701e_9	fill in the blank b048f903d05701e_10	fill in the blank b048f903d05701e_11	fill in the blank b048f903d05701e_12	fill in the blank b048f903d05701e_13	fill in the blank b048f903d05701e_14
Creative Images	fill in the blank b048f903d05701e_15	fill in the blank b048f903d05701e_16	fill in the blank b048f903d05701e_17	fill in the blank b048f903d05701e_18	fill in the blank b048f903d05701e_19	fill in the blank b048f903d05701e_20	fill in the blank b048f903d05701e_21
Excel Hair Products	fill in the blank b048f903d05701e_22	fill in the blank b048f903d05701e_23	fill in the blank b048f903d05701e_24	fill in the blank b048f903d05701e_25	fill in the blank b048f903d05701e_26	fill in the blank b048f903d05701e_27	fill in the blank b048f903d05701e_28
First Class Hair Care	fill in the blank b048f903d05701e_29	fill in the blank b048f903d05701e_30	fill in the blank b048f903d05701e_31	fill in the blank b048f903d05701e_32	fill in the blank b048f903d05701e_33	fill in the blank b048f903d05701e_34	fill in the blank b048f903d05701e_35
Golden Images	fill in the blank b048f903d05701e_36	fill in the blank b048f903d05701e_37	fill in the blank b048f903d05701e_38	fill in the blank b048f903d05701e_39	fill in the blank b048f903d05701e_40	fill in the blank b048f903d05701e_41	fill in the blank b048f903d05701e_42
Oh That Hair	fill in the blank b048f903d05701e_43	fill in the blank b048f903d05701e_44	fill in the blank b048f903d05701e_45	fill in the blank b048f903d05701e_46	fill in the blank b048f903d05701e_47	fill in the blank b048f903d05701e_48	fill in the blank b048f903d05701e_49
One Stop Hair Designs	fill in the blank b048f903d05701e_50	fill in the blank b048f903d05701e_51	fill in the blank b048f903d05701e_52	fill in the blank b048f903d05701e_53	fill in the blank b048f903d05701e_54	fill in the blank b048f903d05701e_55	fill in the blank b048f903d05701e_56
Visions Hair & Nail	fill in the blank b048f903d05701e_57	fill in the blank b048f903d05701e_58	fill in the blank b048f903d05701e_59	fill in the blank b048f903d05701e_60	fill in the blank b048f903d05701e_61	fill in the blank b048f903d05701e_62	fill in the blank b048f903d05701e_63
Total	fill in the blank b048f903d05701e_64	fill in the blank b048f903d05701e_65	fill in the blank b048f903d05701e_66	fill in the blank b048f903d05701e_67	fill in the blank b048f903d05701e_68	fill in the blank b048f903d05701e_69	fill in the blank b048f903d05701e_70
Percent uncollectible	blank	2%	4%	10%	15%	35%	75%
Estimate of uncollectible accounts	fill in the blank b048f903d05701e_71	fill in the blank b048f903d05701e_72	fill in the blank b048f903d05701e_73	fill in the blank b048f903d05701e_74	fill in the blank b048f903d05701e_75	fill in the blank b048f903d05701e_76	fill in the blank b048f903d05701e_77

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3. Estimate the allowance for doubtful accounts, based on the aging of receivables schedule. $fill in the blank 5a81c6f7602cfdb_1

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4. Assume that the allowance for doubtful accounts for Wig Creations has a credit balance of $1,460 before adjustment on December 31, 20Y1. Journalize the adjustment for uncollectible accounts. If an amount box does not require an entry, leave it blank.

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

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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

$62,795$61,335$61,300

because the allowance for doubtful accounts would be

overstatedunderstated

by

$62,795$61,335$61,300

. In addition, the owners capital account would be

overstatedunderstated

by

$62,795$61,335$61,300

because bad debt expense would be

overstatedunderstated

and net income

overstatedunderstated

by

$62,795$61,335$61,300

on the income statement.