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
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. Determine the number of days past due for each of the preceding accounts.
- 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. Journalize the adjustment for uncollectible accounts.
- 5. Assume that the
adjusting entry in (4) was inadvertently omitted, how would the omission affect thebalance 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 - What are the three classifications of receivables?Ch. 8 - Dans Hardware is a small hardware store in the...Ch. 8 - What kind of an account (asset, liability, etc.)...Ch. 8 - After the accounts are adjusted and closed at the...Ch. 8 - A firm has consistently adjusted its allowance...Ch. 8 - Which of the two methods of estimating...Ch. 8 - Neptune Company issued a note receivable to...Ch. 8 - Prob. 8DQCh. 8 - The maker of a 240,000, 6%, 90-day note receivable...Ch. 8 - Prob. 10DQ
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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