Wig Creations Company supplies wigs and hair care products to beauty salons throughout Texas and the Southwest. The accounts receivable derk for Wig Creations prepared the following partially completed aging of receivables schedule as of the end of business on December 31, 20Y1: н Not Days Past Due Past Due 91-120 Over 120 Customer Balance 1-30 31-60 61-90 3 4 ABC Beauty 5 Angel Wgs 15,000 8,000 15,000 8,000 30 Zodac Beauty 31 Subtotals 3,000 875,000 415,000 210,000 112,000 3.000 18.000 55,000 65,000 The following accounts were unintentionally omitted from the aging schedule: Due Date Customer Balance Arcade Beauty Aug. 17, 20Y1 Oct. 30, 20Y1 July 3, 20Y1 Sept. 8, 20Y1 Nov. 23, 20Y1 Nov. 29, 20Y1 Dec. 7, 20Y1 Jan. 11, 20Y2 $10,000 Creative Images 8,500 7,500 6,600 3,600 Excel Hair Products First Class Hair Care Golden Images Oh That Hair One Stop Hair Designs 1,400 4,000 Visions Hair & Nail 9,000 Wig Creations has a past history of uncollectible accounts by age category, as follows: Percent Uncollectible Age Class Not past due 1-30 days past due 31-60 days past due 61-90 days past due 91-120 days past due Over 120 days past due 196 16 25 40 80 Instructions 1. Determine the number of days past due for each of the preceding acoounts. 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, 20Y1. Journalize the adjustment for uncollectible accounts. 5. Assuming that the adjusting entry in (4) was inadvertently omitted, how would the omission affect the balance sheet and income statement?
Wig Creations Company supplies wigs and hair care products to beauty salons throughout Texas and the Southwest. The accounts receivable derk for Wig Creations prepared the following partially completed aging of receivables schedule as of the end of business on December 31, 20Y1: н Not Days Past Due Past Due 91-120 Over 120 Customer Balance 1-30 31-60 61-90 3 4 ABC Beauty 5 Angel Wgs 15,000 8,000 15,000 8,000 30 Zodac Beauty 31 Subtotals 3,000 875,000 415,000 210,000 112,000 3.000 18.000 55,000 65,000 The following accounts were unintentionally omitted from the aging schedule: Due Date Customer Balance Arcade Beauty Aug. 17, 20Y1 Oct. 30, 20Y1 July 3, 20Y1 Sept. 8, 20Y1 Nov. 23, 20Y1 Nov. 29, 20Y1 Dec. 7, 20Y1 Jan. 11, 20Y2 $10,000 Creative Images 8,500 7,500 6,600 3,600 Excel Hair Products First Class Hair Care Golden Images Oh That Hair One Stop Hair Designs 1,400 4,000 Visions Hair & Nail 9,000 Wig Creations has a past history of uncollectible accounts by age category, as follows: Percent Uncollectible Age Class Not past due 1-30 days past due 31-60 days past due 61-90 days past due 91-120 days past due Over 120 days past due 196 16 25 40 80 Instructions 1. Determine the number of days past due for each of the preceding acoounts. 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, 20Y1. Journalize the adjustment for uncollectible accounts. 5. Assuming that the adjusting entry in (4) was inadvertently omitted, how would the omission affect the balance sheet and income statement?
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
Related questions
Question
Transcribed Image Text:Wig Creations Company supplies wigs and hair care products to beauty salons throughout
Texas and the Southwest. The accounts receivable derk for Wig Creations prepared the
following partially completed aging of receivables schedule as of the end of business on
December 31, 20Y1:
н
Not
Days Past Due
Past
Due
91-120 Over 120
Customer
Balance
1-30
31-60
61-90
3
4 ABC Beauty
5 Angel Wgs
15,000
8,000
15,000
8,000
30 Zodac Beauty
31 Subtotals
3,000
875,000 415,000 210,000 112,000
3.000
18.000
55,000
65,000
The following accounts were unintentionally omitted from the aging schedule:
Due Date
Customer
Balance
Arcade Beauty
Aug. 17, 20Y1
Oct. 30, 20Y1
July 3, 20Y1
Sept. 8, 20Y1
Nov. 23, 20Y1
Nov. 29, 20Y1
Dec. 7, 20Y1
Jan. 11, 20Y2
$10,000
Creative Images
8,500
7,500
6,600
3,600
Excel Hair Products
First Class Hair Care
Golden Images
Oh That Hair
One Stop Hair Designs
1,400
4,000
Visions Hair & Nail
9,000
Wig Creations has a past history of uncollectible accounts by age category, as follows:
Percent
Uncollectible
Age Class
Not past due
1-30 days past due
31-60 days past due
61-90 days past due
91-120 days past due
Over 120 days past due
196
16
25
40
80
Instructions
1. Determine the number of days past due for each of the preceding acoounts.
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, 20Y1. Journalize the adjustment for
uncollectible accounts.
5. Assuming that the adjusting entry in (4) was inadvertently omitted, how would the
omission affect the balance sheet and income statement?
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