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Wig Creations Company supplies wigs and hair care products to beauty salons throughout Texas and the Southwest. The accounts receivable derk for Wig Creations prepared the following partially completed aging of receivables schedule as of the end of business on December 31, 20Y1: н Not Days Past Due Past Due 91-120 Over 120 Customer Balance 1-30 31-60 61-90 3 4 ABC Beauty 5 Angel Wgs 15,000 8,000 15,000 8,000 30 Zodac Beauty 31 Subtotals 3,000 875,000 415,000 210,000 112,000 3.000 18.000 55,000 65,000 The following accounts were unintentionally omitted from the aging schedule: Due Date Customer Balance Arcade Beauty Aug. 17, 20Y1 Oct. 30, 20Y1 July 3, 20Y1 Sept. 8, 20Y1 Nov. 23, 20Y1 Nov. 29, 20Y1 Dec. 7, 20Y1 Jan. 11, 20Y2 $10,000 Creative Images 8,500 7,500 6,600 3,600 Excel Hair Products First Class Hair Care Golden Images Oh That Hair One Stop Hair Designs 1,400 4,000 Visions Hair & Nail 9,000 Wig Creations has a past history of uncollectible accounts by age category, as follows: Percent Uncollectible Age Class Not past due 1-30 days past due 31-60 days past due 61-90 days past due 91-120 days past due Over 120 days past due 196 16 25 40 80 Instructions 1. Determine the number of days past due for each of the preceding acoounts. 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 Wig Creations has a credit balance of $7,375 before adjustment on December 31, 20Y1. Journalize the adjustment for uncollectible accounts. 5. Assuming that the adjusting entry in (4) was inadvertently omitted, how would the omission affect the balance sheet and income statement?

Wig Creations Company supplies wigs and hair care products to beauty salons throughout Texas and the Southwest. The accounts receivable derk for Wig Creations prepared the following partially completed aging of receivables schedule as of the end of business on December 31, 20Y1: н Not Days Past Due Past Due 91-120 Over 120 Customer Balance 1-30 31-60 61-90 3 4 ABC Beauty 5 Angel Wgs 15,000 8,000 15,000 8,000 30 Zodac Beauty 31 Subtotals 3,000 875,000 415,000 210,000 112,000 3.000 18.000 55,000 65,000 The following accounts were unintentionally omitted from the aging schedule: Due Date Customer Balance Arcade Beauty Aug. 17, 20Y1 Oct. 30, 20Y1 July 3, 20Y1 Sept. 8, 20Y1 Nov. 23, 20Y1 Nov. 29, 20Y1 Dec. 7, 20Y1 Jan. 11, 20Y2 $10,000 Creative Images 8,500 7,500 6,600 3,600 Excel Hair Products First Class Hair Care Golden Images Oh That Hair One Stop Hair Designs 1,400 4,000 Visions Hair & Nail 9,000 Wig Creations has a past history of uncollectible accounts by age category, as follows: Percent Uncollectible Age Class Not past due 1-30 days past due 31-60 days past due 61-90 days past due 91-120 days past due Over 120 days past due 196 16 25 40 80 Instructions 1. Determine the number of days past due for each of the preceding acoounts. 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 Wig Creations has a credit balance of $7,375 before adjustment on December 31, 20Y1. Journalize the adjustment for uncollectible accounts. 5. Assuming that the adjusting entry in (4) was inadvertently omitted, how would the omission affect the balance sheet and income statement?

Financial Accounting
Financial Accounting
15th Edition
ISBN:9781337272124
Author:Carl Warren, James M. Reeve, Jonathan Duchac
Publisher:Carl Warren, James M. Reeve, Jonathan Duchac
Chapter9: Receivables
Section: Chapter Questions
Problem 2PB: Wig Creations Company supplies wigs and hair care products to beauty salons throughout Texas and the...
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Wig Creations Company supplies wigs and hair care products to beauty salons throughout Texas and the Southwest. The accounts receivable derk for Wig Creations prepared the following partially completed aging of receivables schedule as of the end of business on December 31, 20Y1: н Not Days Past Due Past Due 91-120 Over 120 Customer Balance 1-30 31-60 61-90 3 4 ABC Beauty 5 Angel Wgs 15,000 8,000 15,000 8,000 30 Zodac Beauty 31 Subtotals 3,000 875,000 415,000 210,000 112,000 3.000 18.000 55,000 65,000 The following accounts were unintentionally omitted from the aging schedule: Due Date Customer Balance Arcade Beauty Aug. 17, 20Y1 Oct. 30, 20Y1 July 3, 20Y1 Sept. 8, 20Y1 Nov. 23, 20Y1 Nov. 29, 20Y1 Dec. 7, 20Y1 Jan. 11, 20Y2 $10,000 Creative Images 8,500 7,500 6,600 3,600 Excel Hair Products First Class Hair Care Golden Images Oh That Hair One Stop Hair Designs 1,400 4,000 Visions Hair & Nail 9,000 Wig Creations has a past history of uncollectible accounts by age category, as follows: Percent Uncollectible Age Class Not past due 1-30 days past due 31-60 days past due 61-90 days past due 91-120 days past due Over 120 days past due 196 16 25 40 80 Instructions 1. Determine the number of days past due for each of the preceding acoounts. 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 Wig Creations has a credit balance of $7,375 before adjustment on December 31, 20Y1. Journalize the adjustment for uncollectible accounts. 5. Assuming that the adjusting entry in (4) was inadvertently omitted, how would the omission affect the balance sheet and income statement?
Transcribed Image Text:Wig Creations Company supplies wigs and hair care products to beauty salons throughout Texas and the Southwest. The accounts receivable derk for Wig Creations prepared the following partially completed aging of receivables schedule as of the end of business on December 31, 20Y1: н Not Days Past Due Past Due 91-120 Over 120 Customer Balance 1-30 31-60 61-90 3 4 ABC Beauty 5 Angel Wgs 15,000 8,000 15,000 8,000 30 Zodac Beauty 31 Subtotals 3,000 875,000 415,000 210,000 112,000 3.000 18.000 55,000 65,000 The following accounts were unintentionally omitted from the aging schedule: Due Date Customer Balance Arcade Beauty Aug. 17, 20Y1 Oct. 30, 20Y1 July 3, 20Y1 Sept. 8, 20Y1 Nov. 23, 20Y1 Nov. 29, 20Y1 Dec. 7, 20Y1 Jan. 11, 20Y2 $10,000 Creative Images 8,500 7,500 6,600 3,600 Excel Hair Products First Class Hair Care Golden Images Oh That Hair One Stop Hair Designs 1,400 4,000 Visions Hair & Nail 9,000 Wig Creations has a past history of uncollectible accounts by age category, as follows: Percent Uncollectible Age Class Not past due 1-30 days past due 31-60 days past due 61-90 days past due 91-120 days past due Over 120 days past due 196 16 25 40 80 Instructions 1. Determine the number of days past due for each of the preceding acoounts. 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 Wig Creations has a credit balance of $7,375 before adjustment on December 31, 20Y1. Journalize the adjustment for uncollectible accounts. 5. Assuming that the adjusting entry in (4) was inadvertently omitted, how would the omission affect the balance sheet and income statement?
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