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, 20Y1: Days Past Due Customer Balance Not Past Due 1-30 31-60 61-90 91-120 over 120 Subtotals 646,600 358,900 155,200 71,100 23,900 21,300 16,200 The following accounts were unintentionally omitted from the aging schedule: Customer Due Date Balance Arcade Beauty May 28, 20Y1 $3,000 Creative Images Sept. 7, 20Y1 6,200 Excel Hair Products Oct. 17, 20Y1 800 First Class Hair Care Oct. 24, 20Y1 2,100 Golden Images Nov. 23, 20Y1 700 Oh The Hair Nov. 29, 20Y1 3,600 One Stop Hair Designs Dec. 2, 20Y1 2,300 Visions Hair and Nail Jan. 5, 20Y2 7,600 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 85 Required: 3. Estimate the allowance for doubtful accounts, based on the aging of receivables schedule. $fill in the blank 9b8014fd2f85feb_1 4. Assume that the allowance for doubtful accounts for Wig Creations has a credit balance of $1,890 before adjustment on December 31, 20Y1. Journalize the adjustment for uncollectible accounts.
Bad Debts
At the end of the accounting period, a financial statement is prepared by every company, then at that time while preparing the financial statement, the company determines among its total receivable amount how much portion of receivables is collected by the company during that accounting period.
Accounts Receivable
The word “account receivable” means the payment is yet to be made for the work that is already done. Generally, each and every business sells its goods and services either in cash or in credit. So, when the goods are sold on credit account receivable arise which means the company is going to get the payment from its customer to whom the goods are sold on credit. Usually, the credit period may be for a very short period of time and in some rare cases it takes a year.
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
| Days Past Due | |||||||
| Customer | Balance | Not Past Due | 1-30 | 31-60 | 61-90 | 91-120 | over 120 |
| Subtotals | 646,600 | 358,900 | 155,200 | 71,100 | 23,900 | 21,300 | 16,200 |
The following accounts were unintentionally omitted from the aging schedule:
| Customer | Due Date | Balance | ||
|---|---|---|---|---|
| Arcade Beauty | May 28, 20Y1 | $3,000 | ||
| Creative Images | Sept. 7, 20Y1 | 6,200 | ||
| Excel Hair Products | Oct. 17, 20Y1 | 800 | ||
| First Class Hair Care | Oct. 24, 20Y1 | 2,100 | ||
| Golden Images | Nov. 23, 20Y1 | 700 | ||
| Oh The Hair | Nov. 29, 20Y1 | 3,600 | ||
| One Stop Hair Designs | Dec. 2, 20Y1 | 2,300 | ||
| Visions Hair and Nail | Jan. 5, 20Y2 | 7,600 |
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 | 85 |
Required:
3. Estimate the allowance for doubtful accounts, based on the aging of receivables schedule.
$fill in the blank 9b8014fd2f85feb_1
4. Assume that the allowance for doubtful accounts for Wig Creations has a credit balance of $1,890 before adjustment on December 31, 20Y1. Journalize the adjustment for uncollectible accounts.
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