Question

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:

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	$5,100
Blue Dun Flies	Oct. 10	5,400
Cicada Fish Co.	Sept. 29	8,200
Deschutes Sports	Oct. 20	7,100
Green River Sports	Nov. 7	3,000
Smith River Co.	Nov. 28	2,600
Western Trout Company	Dec. 7	6,600
Wolfe Sports	Jan. 20	4,900

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	9
61–90 days past due	32
91–120 days past due	41
Over 120 days past due	85

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 $4,400 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?

CHART OF ACCOUNTS
Trophy Fish Company
General Ledger
ASSETS 110 Cash 111 Petty Cash 121 Accounts Receivable-Adams Sports & Flies 122 Accounts Receivable-Blue Dun Flies 123 Accounts Receivable-Cicada Fish Co. 124 Accounts Receivable-Deschutes Sports 125 Accounts Receivable-Green River Sports 126 Accounts Receivable-Smith River Co. 127 Accounts Receivable-Western Trout Company 128 Accounts Receivable-Wolfe Sports 129 Allowance for Doubtful Accounts 131 Interest Receivable 132 Notes Receivable 141 Merchandise Inventory 145 Office Supplies 146 Store Supplies 151 Prepaid Insurance 181 Land 191 Store Equipment 192 Accumulated Depreciation-Store Equipment 193 Office Equipment 194 Accumulated Depreciation-Office Equipment LIABILITIES 210 Accounts Payable 211 Salaries Payable 213 Sales Tax Payable 214 Interest Payable 215 Notes Payable EQUITY 310 Common Stock 311 Retained Earnings 312 Dividends 313 Income Summary	REVENUE 410 Sales 610 Interest Revenue EXPENSES 510 Cost of Goods Sold 520 Sales Salaries Expense 521 Advertising Expense 522 Depreciation Expense-Store Equipment 523 Delivery Expense 524 Repairs Expense 529 Selling Expenses 530 Office Salaries Expense 531 Rent Expense 532 Depreciation Expense-Office Equipment 533 Insurance Expense 534 Office Supplies Expense 535 Store Supplies Expense 536 Credit Card Expense 537 Cash Short and Over 538 Bad Debt Expense 539 Miscellaneous Expense 710 Interest Expense

1. Determine the number of days past due for each of the accounts below. If an account is not past due, enter a zero.

Customer	Due Date	Number of Days Past Due
Adams Sports & Flies	May 22, 20Y4	days
Blue Dun Flies	Oct. 10, 20Y4	days
Cicada Fish Co.	Sept. 29, 20Y4	days
Deschutes Sports	Oct. 20, 20Y4	days
Green River Sports	Nov. 7, 20Y4	days
Smith River Co.	Nov. 28, 20Y4	days
Western Trout Company	Dec. 7, 20Y4	days
Wolfe Sports	Jan. 20, 20Y5	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.

Aging of Receivables Schedule

December 31, 20Y4

1				Days Past Due	Days Past Due	Days Past Due	Days Past Due	Days Past Due
2	Customer	Balance	Not Past Due	1-30	31-60	61-90	91-120	Over 120
3	AAA Outfitters	20,700.00	20,700.00
4	Brown Trout Fly Shop	7,100.00			7,100.00
5	~~~~~	~~~~~	~~~~~	~~~~~	~~~~~	~~~~~	~~~~~	~~~~~
6	Zigs Fish Adventures	3,900.00		3,900.00
7	Subtotals	1,307,400.00	756,200.00	292,000.00	118,400.00	41,000.00	18,100.00	81,700.00
8	Adams Sports & Flies
9	Blue Dun Flies
10	Cicada Fish Co.
11	Deschutes Sports
12	Green River Sports
13	Smith River Co.
14	Western Trout Company
15	Wolfe Sports
16	Totals
17	Percentage uncollectible
18	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 Company has a debit balance of $4,400 before adjustment on December 31. Journalize the adjusting entry for uncollectible accounts. Refer to the Chart of Accounts for exact wording of account titles.

PAGE 10

JOURNAL

ACCOUNTING EQUATION

	DATE	DESCRIPTION	POST. REF.	DEBIT	CREDIT	ASSETS	LIABILITIES	EQUITY
1
2

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.

Answer 1

AR