Question

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	19,000		19,000
Brown Trout Fly Shop	7,000						7,000
Zigs Fish Adventures	4,100				4,100
Subtotals	1,291,200		741,700		292,300		111,300		42,400		21,800		81,700

The following accounts were unintentionally omitted from the aging schedule:

Customer	Due Date		Balance
Adams Sports and Flies		May 22	$5,200
Blue Dun Flies		Oct. 10	4,600
Cicada Fish Co.		Sept. 29	7,900
Deschutes Sports		Oct. 20	7,100
Green River Sports		Nov. 7	3,200
Smith River Co.		Nov. 28	2,200
Western Trout Company		Dec. 7	7,200
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	12
61-90 days past due	32
91-120 days past due	38
Over 120 days past due	75

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	19,000	19,000
Brown Trout Fly Shop	7,000			7,000
Zigs Fish Adventures	4100		4100
Subtotals	1,291,200	741,700	292,300	111,300	42,400	21,800	81,700
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 $3,700 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.

Answer 1