In: Accounting
Aging of Receivables; Estimating Allowance for Doubtful Accounts
Trophy Fish Company supplies flies and fishing gear products 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, 20Y7:
Not | Days Past Due | |||||||||||||
Past | ||||||||||||||
Customer | Balance | Due | 1-30 | 31-60 | 61-90 | 91-120 | Over 120 | |||||||
AAA Outfitters | 20,100 | 20,100 | ||||||||||||
Brown Trout Fly Shop | 8,000 | 8,000 | ||||||||||||
Zigs Fish Adventures | 4,400 | 4,400 | ||||||||||||
Subtotals | 1,299,900 | 743,000 | 292,300 | 128,900 | 44,700 | 15,600 | 75,400 |
The following accounts were unintentionally omitted from the aging schedule:
Customer | Due Date | Balance | ||
---|---|---|---|---|
Adams Sports and Flies | May 22 | $4,700 | ||
Blue Dun Flies | Oct. 10 | 5,200 | ||
Cicada Fish Co. | Sept. 29 | 8,800 | ||
Deschutes Sports | Oct. 20 | 6,600 | ||
Green River Sports | Nov. 7 | 3,900 | ||
Smith River Co. | Nov. 28 | 2,300 | ||
Western Trout Company | Dec. 7 | 6,800 | ||
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 | 2 | |
31-60 days past due | 8 | |
61-90 days past due | 29 | |
91-120 days past due | 40 | |
Over 120 days past due | 79 |
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 |
Adams Sports and Flies | May 22 | days |
Blue Dun Flies | Oct. 10 | days |
Cicada Fish Co. | Sept. 29 | days |
Deschutes Sports | Oct. 20 | days |
Green River Sports | Nov. 7 | days |
Smith River Co. | Nov. 28 | days |
Western Trout Company | Dec. 7 | days |
Wolfe Sports | Jan. 20 | 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.
Trophy Fish Company | |||||||
Aging of Receivables Schedule | |||||||
December 31, 20Y7 | |||||||
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 |
AAA Outfitters | 20,100 | 20,100 | |||||
Brown Trout Fly Shop | 8,000 | 8,000 | |||||
Zigs Fish Adventures | 4400 | 4400 | |||||
Subtotals | 1,299,900 | 743,000 | 292,300 | 128,900 | 44,700 | 15,600 | 75,400 |
Adams Sports and Flies | |||||||
Blue Dun Flies | |||||||
Cicada Fish Co. | |||||||
Deschutes Sports | |||||||
Green River Sports | |||||||
Smith River Co. | |||||||
Western Trout Company | |||||||
Wolfe Sports | |||||||
Totals | |||||||
Percent uncollectible (%) | % | % | % | % | % | % | |
Estimate of uncollectible accounts | $ | $ | $ | $ | $ | $ | $ |
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 has a credit balance of $4,600 before adjustment on December 31, 20Y7. Journalize the adjustment for uncollectible accounts.
Dec. 31 | |||
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 stockholders’ equity (retained earnings) would be by $ because bad debt expense would be and net income by $ on the income statement.
Check My Work
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1. | (31 Dec 2017-Due Date) | |||||||||
Customer | Due date | Number of Days past due | ||||||||
Adam Sports and Files | 22-May-17 | 223 | ||||||||
Blue Dun Files | 10-Oct-17 | 82 | ||||||||
Cicada Fish Co | 29-Sep-17 | 93 | ||||||||
Deschutes Sports | 20-Oct-17 | 72 | ||||||||
Green River Sports | 07-Nov-17 | 54 | ||||||||
Smith River Co | 28-Nov-17 | 33 | ||||||||
Western Trout Co | 07-Dec-17 | 24 | ||||||||
Wolfe Sports | 20-Jan-18 | 0 | ||||||||
2,3 | Customer | Balance | Not past Due | 1-30 | 31-60 | 61-90 | 91-120 | over 120 | ||
AAA outfittes | $ 20,100 | $ 20,700 | ||||||||
Brown Trout Fly Shop | $ 8,000 | $ 8,000 | ||||||||
Zing Fish Adventure | $ 4,400 | $ 4,400 | ||||||||
Subtotals | $ 1,299,900 | $ 743,000 | $ 292,300 | $ 128,900 | $ 44,700 | $ 15,600 | $ 75,400 | |||
Adam Sports and Files | $ 4,700 | $ 4,700 | ||||||||
Blue Dun Files | $ 5,200 | $ 5,200 | ||||||||
Cicada Fish Co | $ 8,800 | $ 8,800 | ||||||||
Deschutes Sports | $ 6,600 | $ 6,600 | ||||||||
Green River Sports | $ 3,900 | $ 3,900 | ||||||||
Smith River Co | $ 2,300 | $ 2,300 | ||||||||
Western Trout Co | $ 6,800 | $ 6,800 | ||||||||
Wolfe Sports | $ 4,400 | $ 4,400 | ||||||||
Total | $ 1,342,600 | $ 747,400 | $ 299,100 | $ 135,100 | $ 56,500 | $ 24,400 | $ 80,100 | |||
% Uncollectible | 1% | 2% | 8% | 29% | 40% | 79% | ||||
Estimate of Uncollectible Accounts | $ 113,688 | $ 7,474 | $ 5,982 | $ 10,808 | $ 16,385 | $ 9,760 | $ 63,279 | |||
4 | ||||||||||
Bad Debt Expense | Debit | $ 109,088 | $113,688-$4,600 | |||||||
Allowance for Uncollectible Accounts | Credit | $ 109,088 | ||||||||
5. | ||||||||||
Assets to be | Overstated | by | $ 109,088 | |||||||
Owner's Capital to be | Overstated | by | $ 109,088 | |||||||
Expenses to be | Understated | by | $ 109,088 | |||||||
Net Income to be | Overstated | by | $ 109,088 |