Aging of Receivables; Estimating Allowance for Doubtful Accounts 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, 20Y7: Not Days Past Due Past Customer Balance Due 1-30 31-60 61-90 91-120 Over 120 ABC Beauty 21,000 21,000 Angel Wigs 7,600 7,600 Zodiac Beauty 3,500 3,500 Subtotals 1,305,100 746,400 294,000 125,900 43,800 16,400 78,600 The following accounts were unintentionally omitted from the aging schedule. Assume all due dates are for the current year except for Visions Hair & Nail, which is due in the next year. Customer Due Date Balance Arcade Beauty Aug. 17 $4,500 Creative Images Oct. 30 4,900 Excel Hair Products July 3 8,900 First Class Hair Care Sept. 8 6,600 Golden Images Nov. 23 3,800 Oh That Hair Nov. 29 2,000 One Stop Hair Designs Dec. 7 6,600 Visions Hair & Nail Jan. 11 4,700 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 2 31-60 days past due 8 61-90 days past due 28 91-120 days past due 38 Over 120 days past due 77 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 Aug. 17 fill in the blank ____________ days Creative Images Oct. 30 fill in the blank days Excel Hair Products July 3 fill in the blank days First Class Hair Care Sept. 8 fill in the blank days Golden Images Nov. 23 fill in the blank days Oh That Hair Nov. 29 fill in the blank days One Stop Hair Designs Dec. 7 fill in the blank days Visions Hair & Nail Jan. 11 fill in the blank 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, 20Y7 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 ABC Beauty 21,000 21,000 Angel Wigs 7,600 7,600 Zodiac Beauty 3,500 3,500 Subtotals

Aging of Receivables; Estimating Allowance for Doubtful Accounts 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, 20Y7: Not Days Past Due Past Customer Balance Due 1-30 31-60 61-90 91-120 Over 120 ABC Beauty 21,000 21,000 Angel Wigs 7,600 7,600 Zodiac Beauty 3,500 3,500 Subtotals 1,305,100 746,400 294,000 125,900 43,800 16,400 78,600 The following accounts were unintentionally omitted from the aging schedule. Assume all due dates are for the current year except for Visions Hair & Nail, which is due in the next year. Customer Due Date Balance Arcade Beauty Aug. 17 $4,500 Creative Images Oct. 30 4,900 Excel Hair Products July 3 8,900 First Class Hair Care Sept. 8 6,600 Golden Images Nov. 23 3,800 Oh That Hair Nov. 29 2,000 One Stop Hair Designs Dec. 7 6,600 Visions Hair & Nail Jan. 11 4,700 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 2 31-60 days past due 8 61-90 days past due 28 91-120 days past due 38 Over 120 days past due 77 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 Aug. 17 fill in the blank ____________ days Creative Images Oct. 30 fill in the blank days Excel Hair Products July 3 fill in the blank days First Class Hair Care Sept. 8 fill in the blank days Golden Images Nov. 23 fill in the blank days Oh That Hair Nov. 29 fill in the blank days One Stop Hair Designs Dec. 7 fill in the blank days Visions Hair & Nail Jan. 11 fill in the blank 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, 20Y7 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 ABC Beauty 21,000 21,000 Angel Wigs 7,600 7,600 Zodiac Beauty 3,500 3,500 Subtotals

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

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Aging of Receivables; Estimating Allowance for Doubtful Accounts

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, 20Y7:

		Not	Days Past Due
		Past
Customer	Balance	Due	1-30	31-60	61-90	91-120	Over 120
ABC Beauty	21,000		21,000
Angel Wigs	7,600						7,600

Zodiac Beauty	3,500				3,500
Subtotals	1,305,100		746,400		294,000		125,900	43,800	16,400	78,600

The following accounts were unintentionally omitted from the aging schedule. Assume all due dates are for the current year except for Visions Hair & Nail, which is due in the next year.

Customer	Due Date	Balance
Arcade Beauty		Aug. 17	$4,500
Creative Images		Oct. 30	4,900
Excel Hair Products		July 3	8,900
First Class Hair Care		Sept. 8	6,600
Golden Images		Nov. 23	3,800
Oh That Hair		Nov. 29	2,000
One Stop Hair Designs		Dec. 7	6,600
Visions Hair & Nail		Jan. 11	4,700

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	2
31-60 days past due	8
61-90 days past due	28
91-120 days past due	38
Over 120 days past due	77

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	Aug. 17	fill in the blank ____________ days
Creative Images	Oct. 30	fill in the blank days
Excel Hair Products	July 3	fill in the blank days
First Class Hair Care	Sept. 8	fill in the blank days
Golden Images	Nov. 23	fill in the blank days
Oh That Hair	Nov. 29	fill in the blank days
One Stop Hair Designs	Dec. 7	fill in the blank days
Visions Hair & Nail	Jan. 11	fill in the blank 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, 20Y7
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
ABC Beauty	21,000	21,000
Angel Wigs	7,600			7,600
Zodiac Beauty	3,500		3,500
Subtotals	1,305,100	746,400	294,000	125,900	43,800	16,400	78,600
Arcade Beauty
Creative Images
Excel Hair Products
First Class Hair Care	fill in the blank 5e6d92f1505bffb_22
Golden Images	fill in the blank 5e6d92f1505bffb_29




Percent uncollectible (%)
Estimate of uncollectible accounts	$	$	$	$	$	$	$

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 $3,700 before adjustment on December 31, 20Y7. Journalize the adjustment for uncollectible accounts. If an amount box does not require an entry, leave it blank.

Dec. 31

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______ by $______because the allowance for doubtful accounts would be____ by $____.

In addition, the stockholders’ equity (retained earnings) would be ___ by $__because bad debt expense would be and net income by___ on the income statement.

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