Question

Aging of receivables; estimating allowance for doubtful accounts

Trophy Fish Company supplies flies and fishing gear to sporting goods stores and outfitters throughout the western United States. The accounts receivable clerk for Trophy Fish prepared the following partially completed aging of receivables schedule as of the end of business on December 31, 20Y4:

1			Not	Days Past Due	Days Past Due	Days Past Due	Days Past Due	Days Past Due
2			Past
3	Customer	Balance	Due	1-30	31-60	61-90	91-120	Over 120
4	AAA Outfitters	20,200.00	20,200.00
5	Brown Trout Fly Shop	8,000.00			8,000.00
6	~~~~~	~~~~~	~~~~~	~~~~~	~~~~~	~~~~~	~~~~~	~~~~~
7
8	Zigs Fish Adventures	4,100.00		4,100.00
9	Subtotals	1,304,500.00	748,300.00	297,300.00	117,000.00	38,700.00	23,800.00	79,400.00

The following accounts were unintentionally omitted from the aging schedule. Assume all due dates are for the current year except for Wolfe Sports, which is due in the next year.

Customer	Due Date	Balance
Adams Sports & Flies	May 22	$4,900
Blue Dun Flies	Oct. 10	5,200
Cicada Fish Co.	Sept. 29	8,900
Deschutes Sports	Oct. 20	6,600
Green River Sports	Nov. 7	3,800
Smith River Co.	Nov. 28	2,000
Western Trout Company	Dec. 7	6,400
Wolfe Sports	Jan. 20	4,400

Trophy Fish 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	3
31–60 days past due	10
61–90 days past due	29
91–120 days past due	41
Over 120 days past due	79

1.	Determine the number of days past due for each of the preceding accounts. If an account is not past due, enter a zero.
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 Trophy Fish Company has a debit balance of $4,700 before adjustment on December 31. Journalize the adjusting entry for uncollectible accounts. Refer to the Chart of Accounts for exact wording of account titles.
5.	Assume that the adjusting entry in (4) was inadvertently omitted, how would the omission affect the balance sheet and income statement?

Answer 1

As per our policy, we cannot able to post solution more than four sub parts of question.

Answer 1

Customer	Due Date	Balance	Number of days ( Due Date to dec-31-20Y4)
Adams Sports & Flies	May-22	$4,900	219
Blue Dun Flies	Oct. 10	5,200	81
Cicada Fish Co.	Sept. 29	8,900	92
Deschutes Sports	Oct. 20	6,600	71
Green River Sports	Nov. 7	3,800	54
Smith River Co.	Nov. 28	2,000	33
Western Trout Company	Dec. 7	6,400	24
Wolfe Sports	Jan. 20	4,400	Not due

Answer 2

1			Not	Days Past Due	Days Past Due	Days Past Due	Days Past Due	Days Past Due
2			Past
3	Customer	Balance	Due	1-30	31-60	61-90	91-120	Over 120
4	AAA Outfitters	20,200.00	20,200.00
5	Brown Trout Fly Shop	8,000.00			8,000.00
6	~~~~~	~~~~~	~~~~~	~~~~~	~~~~~	~~~~~	~~~~~	~~~~~
7
8	Zigs Fish Adventures	4,100.00		4,100.00
9	Subtotals	1,304,500	748,300	297,300	117,000	38,700	23,800	79,400
add: omitted		42,200	4,400	6,400	5,800	11,800	8,900	4,900
Total		1,346,700	752,700	303,700	122,800	50,500	32,700	84,300

Answer 3

Classification	Total	Due	1-30	31-60	61-90	91-120	Over 120
Total balance	1,346,700	752,700	303,700	122,800	50,500	32,700	84,300
Multiplied by: percentage of uncollectable		1%	3%	10%	29%	41%	79%
Estimate the allowance for doubtful accounts	123567	7527	9111	12280	14645	13407	66597

Answer 4

allowance for doubtful accounts for Trophy Fish Company has a debit balance			4700
add: Estimate the allowance for doubtful accounts (credit balance)			123567
adjustment for bad debt expense			128267
Date	general journal	debit	credit
Dec-31	bad debt expense	128267
	allowance for doubtful account		128267
	(to record bad debt expense)