Days Past Due Customer Balance Not Past Due 1-30 31-60 61-90 91-120 over 120
Subtotals 573,100 318,200 137,500 63,000 21,200 18,900 14,300
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 That Hair Nov. 29, 20Y1 3,200
One Stop Hair Designs Dec. 2, 20Y1 2,000
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 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.
Customer Due Date Number of Days Past Due
Arcade Beauty May 28, 20Y1 days
Creative Images Sept. 7, 20Y1 days
Excel Hair Products Oct. 17, 20Y1 days
First Class Hair Care Oct. 24, 20Y1 days
Golden Images Nov. 23, 20Y1 days
Oh The Hair Nov. 29, 20Y1 days
One Stop Hair Designs Dec. 2, 20Y1 days
Visions Hair and Nail Jan. 5, 20Y2 days
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 $1,820 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.