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 835,600 463,800 200,500 91,900 30,900 27,600 20,900 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 5,600 Excel Hair Products Oct. 17, 20Y1 700 First Class Hair Care Oct. 24, 20Y1 1,800 Golden Images Nov. 23, 20Y1 600 Oh The Hair Nov. 29, 20Y1 3,200 One Stop Hair Designs Dec. 2, 20Y1 2,000 Visions Hair and Nail Jan. 5, 20Y2 6,800 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 12 61-90 days past due 18 91-120 days past due 40 Over 120 days past due 85 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 May 28, 20Y1 fill in the blank b0e8d8fb905b013_1 days Creative Images Sept. 7, 20Y1 fill in the blank b0e8d8fb905b013_2 days Excel Hair Products Oct. 17, 20Y1 fill in the blank b0e8d8fb905b013_3 days First Class Hair Care Oct. 24, 20Y1 fill in the blank b0e8d8fb905b013_4 days Golden Images Nov. 23, 20Y1 fill in the blank b0e8d8fb905b013_5 days Oh The Hair Nov. 29, 20Y1 fill in the blank b0e8d8fb905b013_6 days One Stop Hair Designs Dec. 2, 20Y1 fill in the blank b0e8d8fb905b013_7 days Visions Hair and Nail Jan. 5, 20Y2 fill in the blank b0e8d8fb905b013_8 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, 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 Arcade Beauty Creative Images Excel Hair Products First Class Hair Care Golden Images Oh The Hair One Stop Hair Designs Visions Hair and Nail Total Percent uncollectible 2% 4% 12% 18% 40% 85% Estimate of uncollectible accounts f2 f 7a0af6f75fa0006_74 fill in the blank 7a0af6f75fa0006_75 fill in the blank 7a0af6f75fa0006_76 fill in the blank 7a0af6f75fa0006_77 3. Estimate the allowance for doubtful accounts, based on the aging of receivables schedule. $fill in the blank 05361d055022027_1 4. Assume that the allowance for doubtful accounts for Wig Creations has a credit balance of $1,780 before adjustment on December 31, 20Y1. 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? On the balance sheet, assets would be by because the allowance for doubtful accounts would be by . In addition, the owner’s capital account would be by because bad debt expense would be and net income by on the income statement.

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 835,600 463,800 200,500 91,900 30,900 27,600 20,900 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 5,600 Excel Hair Products Oct. 17, 20Y1 700 First Class Hair Care Oct. 24, 20Y1 1,800 Golden Images Nov. 23, 20Y1 600 Oh The Hair Nov. 29, 20Y1 3,200 One Stop Hair Designs Dec. 2, 20Y1 2,000 Visions Hair and Nail Jan. 5, 20Y2 6,800 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 12 61-90 days past due 18 91-120 days past due 40 Over 120 days past due 85 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 May 28, 20Y1 fill in the blank b0e8d8fb905b013_1 days Creative Images Sept. 7, 20Y1 fill in the blank b0e8d8fb905b013_2 days Excel Hair Products Oct. 17, 20Y1 fill in the blank b0e8d8fb905b013_3 days First Class Hair Care Oct. 24, 20Y1 fill in the blank b0e8d8fb905b013_4 days Golden Images Nov. 23, 20Y1 fill in the blank b0e8d8fb905b013_5 days Oh The Hair Nov. 29, 20Y1 fill in the blank b0e8d8fb905b013_6 days One Stop Hair Designs Dec. 2, 20Y1 fill in the blank b0e8d8fb905b013_7 days Visions Hair and Nail Jan. 5, 20Y2 fill in the blank b0e8d8fb905b013_8 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, 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 Arcade Beauty Creative Images Excel Hair Products First Class Hair Care Golden Images Oh The Hair One Stop Hair Designs Visions Hair and Nail Total Percent uncollectible 2% 4% 12% 18% 40% 85% Estimate of uncollectible accounts f2 f 7a0af6f75fa0006_74 fill in the blank 7a0af6f75fa0006_75 fill in the blank 7a0af6f75fa0006_76 fill in the blank 7a0af6f75fa0006_77 3. Estimate the allowance for doubtful accounts, based on the aging of receivables schedule. $fill in the blank 05361d055022027_1 4. Assume that the allowance for doubtful accounts for Wig Creations has a credit balance of $1,780 before adjustment on December 31, 20Y1. 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? On the balance sheet, assets would be by because the allowance for doubtful accounts would be by . In addition, the owner’s capital account would be by because bad debt expense would be and net income by on the income statement.

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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Aging of Receivables; Estimating Allowance for Doubtful Accounts

			Days Past Due
Customer	Balance	Not Past Due	1-30	31-60	61-90	91-120	over 120
Subtotals	835,600	463,800	200,500	91,900	30,900	27,600	20,900

The following accounts were unintentionally omitted from the aging schedule:

Customer	Balance
Arcade Beauty	May 28, 20Y1	$2,700
Creative Images	Sept. 7, 20Y1	5,600
Excel Hair Products	Oct. 17, 20Y1	700
First Class Hair Care	Oct. 24, 20Y1	1,800
Golden Images	Nov. 23, 20Y1	600
Oh The Hair	Nov. 29, 20Y1	3,200
One Stop Hair Designs	Dec. 2, 20Y1	2,000
Visions Hair and Nail	Jan. 5, 20Y2	6,800

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	12
61-90 days past due	18
91-120 days past due	40
Over 120 days past due	85

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	May 28, 20Y1	fill in the blank b0e8d8fb905b013_1 days
Creative Images	Sept. 7, 20Y1	fill in the blank b0e8d8fb905b013_2 days
Excel Hair Products	Oct. 17, 20Y1	fill in the blank b0e8d8fb905b013_3 days
First Class Hair Care	Oct. 24, 20Y1	fill in the blank b0e8d8fb905b013_4 days
Golden Images	Nov. 23, 20Y1	fill in the blank b0e8d8fb905b013_5 days
Oh The Hair	Nov. 29, 20Y1	fill in the blank b0e8d8fb905b013_6 days
One Stop Hair Designs	Dec. 2, 20Y1	fill in the blank b0e8d8fb905b013_7 days
Visions Hair and Nail	Jan. 5, 20Y2	fill in the blank b0e8d8fb905b013_8 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, 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
Arcade Beauty
Creative Images
Excel Hair Products
First Class Hair Care
Golden Images
Oh The Hair
One Stop Hair Designs
Visions Hair and Nail
Total
Percent uncollectible		2%	4%	12%	18%	40%	85%
Estimate of uncollectible accounts		f2	f	7a0af6f75fa0006_74	fill in the blank 7a0af6f75fa0006_75	fill in the blank 7a0af6f75fa0006_76	fill in the blank 7a0af6f75fa0006_77

3. Estimate the allowance for doubtful accounts, based on the aging of receivables schedule.
$fill in the blank 05361d055022027_1

4. Assume that the allowance for doubtful accounts for Wig Creations has a credit balance of $1,780 before adjustment on December 31, 20Y1. 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?

On the balance sheet, assets would be by because the allowance for doubtful accounts would be by . In addition, the owner’s capital account would be by because bad debt expense would be and net income by on the income statement.

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