Wig Creations Company supplies wigs and hair care products to beauty salons throughout Texas and the Southwest.

Question:

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:

The following accounts were unintentionally omitted from the aging schedule:
Customer _________________Due Date ____________Balance
Arcade Beauty ................ Aug. 17, 2015 ............... $10,000
Creative Images ............... Oct. 30, 2015 .................. 8,500
Excel Hair Products ............ July 3, 2015 .................. 7,500
First Class Hair Care .......... Sept. 8, 2015 .................. 6,600
Golden Images ............... Nov. 23, 2015 .................. 3,600
Oh That Hair .................. Nov. 29, 2015 .................. 1,400
One Stop Hair Designs ....... Dec. 7, 2015 .................. 4,000
Visions Hair & Nail .......... Jan. 11, 2016 .................. 9,000
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 .................................... 4
31-60 days past due ................................. 16
61-90 days past due ................................. 25
91-120 days past due ............................... 40
Over 120 days past due ............................. 80
Instructions
1. Determine the number of days past due for each of the preceding accounts.
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.
5. Assume that the adjusting entry in (4) was inadvertently omitted, how would the omission affect the balance sheet and income statement?

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