Corporate Financial Accounting
Corporate Financial Accounting
14th Edition
ISBN: 9781305653535
Author: Carl Warren, James M. Reeve, Jonathan Duchac
Publisher: Cengage Learning
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Chapter 8, Problem 8.2BPR

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:

Chapter 8, Problem 8.2BPR, Aging of receivables; estimating allowance for doubtful accounts Wig Creations Company supplies wigs

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 $10,000
Creative Images Oct. 30 8,500
Excel Hair Products July 3 7,500
First Class Hair Care Sept. 8 6,600
Golden Images Nov. 23 3,600
Oh That Hair Nov. 29 1,400
One Stop Hair Designs Dec. 7 4,000
Visions Hair & Nail Jan. 11 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. 1. Determine the number of days past due for each of the preceding accounts.
  2. 2. Complete the aging of receivables schedule by adding the omitted accounts to the bottom of the schedule and updating the totals.
  3. 3. Estimate the allowance for doubtful accounts, based on the aging of receivables schedule.
  4. 4. Assume that the allowance for doubtful accounts for Wig Creations has a credit balance of $7,375 before adjustment on December 31. Journalize the adjustment for uncollectible accounts.
  5. 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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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…
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 19,100   19,100                       Angel Wigs 7,700           7,700                 Zodiac Beauty 4,500       4,500                   Subtotals 1,294,300   742,000   297,300   121,100   42,400   16,100   75,400   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 $5,300   Creative Images   Oct. 30 5,200   Excel Hair Products…
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 577,500 320,500 138,600 63,500 21,400 19,100 14,400 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 5,700   Excel Hair Products   Oct. 17, 20Y1 800   First Class Hair Care   Oct. 24, 20Y1 1,900   Golden Images   Nov. 23, 20Y1 600   Oh That Hair   Nov. 29, 20Y1 3,200   One Stop Hair Designs   Dec. 2, 20Y1 2,100   Visions Hair & Nail   Jan. 5, 20Y2 6,900   Wig Creations has a past history of…

Chapter 8 Solutions

Corporate Financial Accounting

Ch. 8 - Direct write-off method Journalize the following...Ch. 8 - Allowance method Journalize the following...Ch. 8 - Percent of sales method At the end of the current...Ch. 8 - Analysis of receivables method At the end of the...Ch. 8 - Note receivable Prefix Supply Company received a...Ch. 8 - Prob. 8.1EXCh. 8 - Prob. 8.2EXCh. 8 - Entries for uncollectible accounts, using direct...Ch. 8 - Entries for uncollectible receivables, using...Ch. 8 - Entries to write off accounts receivable Creative...Ch. 8 - Providing for doubtful accounts At the end of the...Ch. 8 - Prob. 8.7EXCh. 8 - Aging of receivables schedule The accounts...Ch. 8 - Estimating allowance for doubtful accounts Evers...Ch. 8 - Adjustment for uncollectible accounts Using data...Ch. 8 - Estimating doubtful accounts Outlaw Bike Co. is a...Ch. 8 - Entry for uncollectible accounts Using the data in...Ch. 8 - Entries for bad debt expense under the direct...Ch. 8 - Entries for bad debt expense under the direct...Ch. 8 - Effect of doubtful accounts on net income During...Ch. 8 - Effect of doubtful accounts on net income Using...Ch. 8 - Entries for bad debt expense under the direct...Ch. 8 - Entries for bad debt expense under the direct...Ch. 8 - Determine due date and interest on notes Determine...Ch. 8 - Entries for notes receivable Valley Designs Issued...Ch. 8 - Entries for notes receivable The series of five...Ch. 8 - Entries for notes receivable, including year-end...Ch. 8 - Entries for receipt and dishonor of note...Ch. 8 - Entries for receipt and dishonor of notes...Ch. 8 - Receivables on the balance sheet List any errors...Ch. 8 - Allowance method entries The following...Ch. 8 - Aging of receivables; estimating allowance for...Ch. 8 - Compare two methods of accounting for...Ch. 8 - Details of notes receivable and related entries...Ch. 8 - Notes receivable entries The following data relate...Ch. 8 - Sales and notes receivable transactions The...Ch. 8 - Allowance method entries The following...Ch. 8 - Aging of receivables; estimating allowance for...Ch. 8 - Compare two methods of accounting for...Ch. 8 - Details of notes receivable and related entries...Ch. 8 - Prob. 8.5BPRCh. 8 - Sales and notes receivable transactions The...Ch. 8 - Continuing Company AnalysisAmazon: Accounts...Ch. 8 - Ralph Lauren: Accounts receivable turnover and...Ch. 8 - Prob. 8.3ADMCh. 8 - Prob. 8.4ADMCh. 8 - Ethics In Action Bud Lighting Co. is a retailer of...Ch. 8 - Communication On January 1, Xtreme Co. began...
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