Question

Wig Creations Company supplies wigs and hair care products to beauty salons throughout Texas and the Southwest. The accounts receivable clerk for Wig Creations prepared the following partially completed aging of receivables schedule as of the end of business on December 31, 20Y1:

			Days Past Due
Customer	Balance	Not Past Due	1-30	31-60	61-90	91-120	over 120
Subtotals	660,200	366,500	158,400	72,600	24,400	21,800	16,500

The following accounts were unintentionally omitted from the aging schedule:

Customer	Due Date		Balance
Arcade Beauty		May 28, 20Y1	$2,900
Creative Images		Sept. 7, 20Y1	6,100
Excel Hair Products		Oct. 17, 20Y1	800
First Class Hair Care		Oct. 24, 20Y1	2,000
Golden Images		Nov. 23, 20Y1	700
Oh The Hair		Nov. 29, 20Y1	3,500
One Stop Hair Designs		Dec. 2, 20Y1	2,200
Visions Hair and Nail		Jan. 5, 20Y2	7,400

Wig Creations 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	12
61-90 days past due	18
91-120 days past due	40
Over 120 days past due	80

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
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. If an amount box does not require an entry, leave it blank.

Wig Creations Company
Aging of Receivables Schedule
December 31, 20Y1
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
Subtotals
Arcade Beauty
Creative Images
Excel Hair Products
First Class Hair Care
Golden Images
Oh The Hair
One Stop Hair Designs
Visions Hair and Nail
Total
Percent uncollectible		1%	3%	12%	18%	40%	80%
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 Wig Creations has a credit balance of $1,630 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.

Answer 1

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	Period End	Number of Days Past Due
Arcade Beauty	28-05-2001	31-12-2001	217
Creative Images	07-09-2001	31-12-2001	115
Excel Hair Products	17-10-2001	31-12-2001	75
First Class Hair Care	24-10-2001	31-12-2001	68
Golden Images	23-11-2001	31-12-2001	38
Oh The Hair	29-11-2001	31-12-2001	32
One Stop Hair Designs	02-12-2001	31-12-2001	29
Visions Hair and Nail	05-01-2002	31-12-2001	0
2.)
December 31, 20Y1
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
Subtotals	6,60,200	3,66,500	1,58,400	72,600	24,400	21,800	16,500
Arcade Beauty	2,900						2,900
Creative Images	6,100					6,100
Excel Hair Products	800				800
First Class Hair Care	2,000				2,000
Golden Images	700			700
Oh The Hair	3,500			3,500
One Stop Hair Designs	2,200		2,200
Visions Hair and Nail	7,400	7,400
Total	6,85,800	3,73,900	1,60,600	76,800	27,200	27,900	19,400
Percent uncollectible		1%	3%	12%	18%	40%	80%
Estimate of uncollectible accounts	49,349	3,739	4,818	9,216	4,896	11,160	15,520
3.)
Estimation of the allowance for doubtful accounts, based on the aging of receivables schedule
Allowance for doubtful accounts is $ 49,349 .
4.)
Journal Entry on December 31,20Y1
Account Titles	Debit	Credit
Bad Debt Expense	47,719
Allowance for doubtful accounts		47,719
(49,349 - 1,630 )
5.)	ekkarill92 Next > < Previous Related Solutions Aging of Receivables; Estimating Allowance for Doubtful Accounts Wig Creations Company supplies wigs and hair care... Aging of Receivables; Estimating Allowance for Doubtful Accounts Wig Creations Company supplies wigs and hair care products to beauty salons throughout Texas and the Southwest. The accounts receivable clerk for Wig Creations prepared the following partially completed aging of receivables schedule as of the end of business on December 31, 20Y1: Days Past Due Customer Balance Not Past Due 1-30 31-60 61-90 91-120 over 120 Subtotals 914,200 507,300 219,400 100,600 33,800 30,200 22,900 The following accounts were unintentionally omitted from... Aging of Receivables; Estimating Allowance for Doubtful Accounts Wig Creations Company supplies wigs and hair care... Aging of Receivables; Estimating Allowance for Doubtful Accounts Wig Creations Company supplies wigs and hair care products to beauty salons throughout Texas and the Southwest. The accounts receivable clerk for Wig Creations prepared the following partially completed aging of receivables schedule as of the end of business on December 31, 20Y1: Days Past Due Customer Balance Not Past Due 1-30 31-60 61-90 91-120 over 120 Subtotals 690,900 383,400 165,800 76,000 25,600 22,800 17,300 The following accounts were unintentionally omitted from... Aging of Receivables; Estimating Allowance for Doubtful Accounts Wig Creations Company supplies wigs and hair care... Aging of Receivables; Estimating Allowance for Doubtful Accounts Wig Creations Company supplies wigs and hair care products to beauty salons throughout Texas and the Southwest. The accounts receivable clerk for Wig Creations prepared the following partially completed aging of receivables schedule as of the end of business on December 31, 20Y1: Days Past Due Customer Balance Not Past Due 1-30 31-60 61-90 91-120 over 120 Subtotals 653,400 362,600 156,800 71,900 24,200 21,600 16,300 The following accounts were unintentionally omitted from... Aging of Receivables; Estimating Allowance for Doubtful Accounts Wig Creations Company supplies wigs and hair care... Aging of Receivables; Estimating Allowance for Doubtful Accounts Wig Creations Company supplies wigs and hair care products to beauty salons throughout Texas and the Southwest. The accounts receivable clerk for Wig Creations prepared the following partially completed aging of receivables schedule as of the end of business on December 31, 20Y1: Days Past Due Customer Balance Not Past Due 1-30 31-60 61-90 91-120 Over 120 Subtotals 907,000 503,300 217,700 99,800 33,600 29,900 22,700 The following accounts were unintentionally omitted from... 1. The factory of Hair-Puffs Inc. produces hair-wigs. As a by-product of this wig production, it... 1. The factory of Hair-Puffs Inc. produces hair-wigs. As a by-product of this wig production, it also produces dangerous emissions of toxic gases(as a result of the strong glue used to hold the hair in place). The De-Lite car factory, down the road, experiences a negative externality from this production process. Suppose that the supply curve (private marginal cost) for the wig factory is of normal upward slope, and it faces a market demand or marginal benefit curve, also of... Hair Care Inc. is a wholesaler of hair supplies. Hair Care uses a perpetual inventory system.... Hair Care Inc. is a wholesaler of hair supplies. Hair Care uses a perpetual inventory system. The following transactions (summarized) have been selected for analysis: a. Sold merchandise for cash (cost of merchandise $29,197) $ 51,600 b. Received merchandise returned by customers as unsatisfactory (but in perfect condition), for cash refund (original cost of merchandise $400) 640 c. Sold merchandise (costing $4,950) to a customer, on account with terms 3/10, n/30 10,000 d. Collected half of the balance owed by... Why do we record hair care supplies as an asset when received, but record office supplies... Why do we record hair care supplies as an asset when received, but record office supplies as an expense when received? If we record hair care supplies as an expense instead when received, how will that change the related adjusting journal entry? Will my net income be correct anyway? Trophy Fish Company supplies flies and fishing gear products to sporting goods stores and outfitters throughout... 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 19,900 19,900 Brown Trout Fly Shop 7,100 7,100 Zigs Fish Adventures 4,100 4,100 Subtotals 1,306,300 752,000 284,300 127,200... Trophy Fish Company supplies flies and fishing gear products to sporting goods stores and outfitters throughout... 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 20,900 20,900 Brown Trout Fly Shop 7,400 7,400 Zigs Fish Adventures 3,600 3,600 Subtotals 1,307,800 759,500 281,400 125,000... Acme Products, a manufacturer of low-priced hair care products (as well as frozen dinners and large... Acme Products, a manufacturer of low-priced hair care products (as well as frozen dinners and large screen TVs), claims that its hair spray lasts as long as the industry leader’s higher priced product. You take a sample of 60 applications of Acme’s hair spray and 60 applications of the leading hair spray. Results: On average, the Acme applications lasted for 12.7 hours with a standard deviation of 1.4 hours while the leading hairspray lasted 11.8 hours with a standard deviation... ADVERTISEMENT Subjects Accounting Advanced Math Anatomy and Physiology Biology Chemistry Civil Engineering Computer Science Economics Electrical Engineering Finance History Math Mechanical Engineering Operations Management Physics Psychology Statistics and Probability Nursing Other ADVERTISEMENT Latest Questions sara is a 50-year-old woman who lives in a poor village in india. unfortunately, sara’s health... What is your opinion on the use of AI technology? Is it necessary or is it... For this problem, carry at least four digits after the decimal in your calculations. Answers may... Why is it okay to speculate on Currency? What is the budgeting cycle and master budget? Why should companies use a master budget? please i need to have good answers and easy to understand This exercise refers to the... (1 point) Find y as a function of t if y′′+25y=0, y(0)=4,y′(0)=6. y= ? ADVERTISEMENT About @ 2020 WizEdu