Concept explainers
(1)
Accounts receivable
Accounts receivable refers to the amounts to be received within a short period from customers upon the sale of goods and services on account. In other words, accounts receivable are amounts customers owe to the business. Accounts receivable is an asset of a business.
Due date:
Due date is the maturity date on note/account, on due date the borrower is supposed to pay the debt.
Past due:
Past due is the number of days of not receiving/making payment on the overdue account.
Analysis of receivables method:
A method of determining the estimated uncollectible receivables based on the age of individual accounts receivable is known as analysis of receivables method. This method is otherwise known as aging of receivables method. Under analysis of receivables method, estimated
The number of days each account is past due as of December 31, 2015.
(2)
To complete: The aging of receivables schedule, by adding the omitted accounts to the bottom of the schedule and update the totals.
(3)
To prepare: An estimate for allowance for doubtful accounts, on the basis of aging of receivables schedule.
(4)
To Journalize: The
(5)
To identify: The effect on the balance sheet and income statement, if adjusting entry is omitted unintentionally.
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FINANCIAL AND MANAGERIAL ACCOUNTING
- 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: The following accounts were unintentionally omitted from the aging schedule: Wig Creations has a past history of uncollectible accounts by age category, as follows: Instructions 1. Determine the number of days past due for each of the preceding accounts. 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?arrow_forwardAging 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, 20Y7: Not Days Past Due Past Customer Balance Due 1-30 31-60 61-90 91-120 Over 120 ABC Beauty 21,000 21,000 Angel Wigs 7,600 7,600 Zodiac Beauty 3,500 3,500 Subtotals 1,305,100 746,400 294,000 125,900 43,800 16,400 78,600 The following accounts were unintentionally omitted from the aging schedule. Assume all due dates are for the current year except for Visions Hair & Nail, which is due in the next year. Customer Due Date Balance Arcade Beauty Aug. 17 $4,500 Creative Images Oct. 30 4,900 Excel Hair Products…arrow_forwardAging 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 646,600 358,900 155,200 71,100 23,900 21,300 16,200 The following accounts were unintentionally omitted from the aging schedule: Customer Due Date Balance Arcade Beauty May 28, 20Y1 $3,000 Creative Images Sept. 7, 20Y1 6,200 Excel Hair Products Oct. 17, 20Y1 800 First Class Hair Care Oct. 24, 20Y1 2,100 Golden Images Nov. 23, 20Y1 700 Oh The Hair Nov. 29, 20Y1 3,600 One Stop Hair Designs Dec. 2, 20Y1 2,300 Visions Hair and Nail Jan. 5, 20Y2 7,600 Wig Creations has a past history of…arrow_forward
- 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 835,600 463,800 200,500 91,900 30,900 27,600 20,900 The following accounts were unintentionally omitted from the aging schedule: Customer Due Date Balance Arcade Beauty May 28, 20Y1 $2,700 Creative Images Sept. 7, 20Y1 5,600 Excel Hair Products Oct. 17, 20Y1 700 First Class Hair Care Oct. 24, 20Y1 1,800 Golden Images Nov. 23, 20Y1 600 Oh The Hair Nov. 29, 20Y1 3,200 One Stop Hair Designs Dec. 2, 20Y1 2,000 Visions Hair and Nail Jan. 5, 20Y2 6,800 Wig Creations has a past history of…arrow_forwardAllowance Method for Doubtful Accounts Averys All-Natural Company supplies wigs and hair care products to beauty salons throughout Texas and the Southwest. The accounts receivable clerk for Averys All-Natural prepared the following aging-of-receivables schedule as of the end of business on December 31, 20Y7: Days Past Due Customer Balance Not PastDue 1–30 31–60 61–90 91–120 Over 120 AAA Beauty 27,500 27,500 Amelia's Wigs 3,750 3,750 Zim’s Beauty 1,650 1,650 Totals 1,100,000 750,000 180,000 75,000 45,000 22,000 28,000 Averys All-Natural Company has a past history of uncollectible accounts by age category, as follows: Age Class PercentUncollectible Not past due 1 % 1–30 days past due 3 31–60 days past due 7 61–90 days past due 16 91–120 days past due 40 Over 120 days past due 90 4. Assume that on March 4, 20Y8, Averys All-Natural wrote off the $2,950 account of Superior…arrow_forwardAllowance Method for Doubtful Accounts Averys All-Natural Company supplies wigs and hair care products to beauty salons throughout Texas and the Southwest. The accounts receivable clerk for Averys All-Natural prepared the following aging-of-receivables schedule as of the end of business on December 31, 20Y7: Days Past Due Customer Balance Not PastDue 1–30 31–60 61–90 91–120 Over 120 AAA Beauty 27,500 27,500 Amelia's Wigs 3,750 3,750 Zim’s Beauty 1,650 1,650 Totals 1,100,000 750,000 180,000 75,000 45,000 22,000 28,000 Averys All-Natural Company has a past history of uncollectible accounts by age category, as follows: Age Class PercentUncollectible Not past due 1 % 1–30 days past due 3 31–60 days past due 7 61–90 days past due 16 91–120 days past due 40 Over 120 days past due 90 Instructions: 1. Estimate the allowance for doubtful accounts, based on the aging-of-receivables…arrow_forward
- 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, 20Y7: Not Days Past Due Past Customer Balance Due 1-30 31-60 61-90 91-120 Over 120 АВС Веauty 19,000 19,000 Angel Wigs 7,100 7,100 Zodiac Beauty 3,500 3,500 Subtotals 1,316,900 752,700 299,000 128,300 39,800 16,400 80,700 The following accounts were unintentionally omitted from the aging schedule. Assume all due dates are for the current year except for Visions Hair & Nail, which is due in the next year. Customer Due Date Balance Arcade Beauty Aug. 17 $5,300 Creative Images Oct. 30 4,700 Excel Hair Products July 3 8,500 First Class Hair Care Sept. 8 6,700 Golden Images Nov. 23 3,300 Ob That Eair Nov 2Oarrow_forwardAllowance Method for Doubtful Accounts Averys All-Natural Company supplies wigs and hair care products to beauty salons throughout Texas and the Southwest. The accounts receivable clerk for Averys All-Natural prepared the following aging-of-receivables schedule as of the end of business on December 31, 20Y7: Days Past Due Customer Balance Not PastDue 1–30 31–60 61–90 91–120 Over 120 AAA Beauty 27,500 27,500 Amelia's Wigs 3,750 3,750 Zim’s Beauty 1,650 1,650 Totals 1,100,000 750,000 180,000 75,000 45,000 22,000 28,000 Averys All-Natural Company has a past history of uncollectible accounts by age category, as follows: Age Class PercentUncollectible Not past due 1 % 1–30 days past due 3 31–60 days past due 7 61–90 days past due 16 91–120 days past due 40 Over 120 days past due 90 lOOK AT SCREEN SHOTS FOR THE QUESTIONS!!!!!!!!!!!!!!!!!!!!!!arrow_forwardAllowance Method for Doubtful Accounts Averys All-Natural Company supplies wigs and hair care products to beauty salons throughout Texas and the Southwest. The accounts receivable clerk for Averys All-Natural prepared the following aging-of-receivables schedule as of the end of business on December 31, 20Y7: Days Past Due Customer Balance Not PastDue 1–30 31–60 61–90 91–120 Over 120 AAA Beauty 27,500 27,500 Amelia's Wigs 3,750 3,750 Zim’s Beauty 1,650 1,650 Totals 1,100,000 750,000 180,000 75,000 45,000 22,000 28,000 Averys All-Natural Company has a past history of uncollectible accounts by age category, as follows: Age Class PercentUncollectible Not past due 1 % 1–30 days past due 3 31–60 days past due 7 61–90 days past due 16 91–120 days past due 40 Over 120 days past due 90 Instructions: 1. Estimate the allowance for doubtful accounts, based on the aging-of-receivables…arrow_forward
- Allowance Method for Doubtful Accounts Averys All-Natural Company supplies wigs and hair care products to beauty salons throughout Texas and the Southwest. The accounts receivable clerk for Averys All-Natural prepared the following aging-of-receivables schedule as of the end of business on December 31, 20Y7: Days Past Due Customer Balance Not PastDue 1–30 31–60 61–90 91–120 Over 120 AAA Beauty 27,500 27,500 Amelia's Wigs 3,750 3,750 Zim’s Beauty 1,650 1,650 Totals 1,100,000 750,000 180,000 75,000 45,000 22,000 28,000 Averys All-Natural Company has a past history of uncollectible accounts by age category, as follows: Age Class PercentUncollectible Not past due 1 % 1–30 days past due 3 31–60 days past due 7 61–90 days past due 16 91–120 days past due 40 Over 120 days past due 90 I ONLY WANT 4 - 5B ANSWERED NOT WHATS ON THE SNIPPET. 4. Assume that on March 4, 20Y8, Averys…arrow_forwardAverys All-Natural Company supplies wigs and hair care products to beauty salons throughout Texas and the Southwest. The accounts receivable clerk for Averys All-Natural prepared the following aging-of-receivables schedule as of the end of business on December 31, 20Y7: Days Past Due Customer Balance Not PastDue 1–30 31–60 61–90 91–120 Over 120 AAA Beauty 27,500 27,500 Amelia's Wigs 3,750 3,750 Zim's Beauty 1,650 1,650 Totals 1,100,000 750,000 180,000 75,000 45,000 22,000 28,000 Averys All-Natural Company has a past history of uncollectible accounts by age category, as follows: Age Class PercentUncollectible Not past due 1 % 1–30 days past due 3 31–60 days past due 7 61–90 days past due 16 91–120 days past due 40 Over 120 days past due 90 Instructions: 1. Estimate the allowance for doubtful accounts, based on the aging-of-receivables schedule.fill in the blank 1 2. Assume…arrow_forwardWig 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 Balance Not Past Due 1-30 31-60 61-90 91-120 over 120 798,100 443,000 191,500 87,800 29,500 26,300 20,000 The following accounts were unintentionally omitted from the aging schedule: Customer Due Date Balance Arcade Beauty May 28, 20Y1 $3,200 Creative Images Sept. 7, 20Y1 6,700 Excel Hair Products Oct. 17, 20Y1 900 First Class Hair Care Oct. 24, 20Y1 2,200 Golden Images Nov. 23, 20Y1 700 Oh The Hair Nov. 29, 20Y1 3,900 One Stop Hair Designs Dec. 2, 20Y1 2,500 Visions Hair and Nail Jan. 5, 20Y2 8,200 Wig Creations has a past history of uncollectible accounts by age category, as follows: Age Class Percent Uncollectible Not…arrow_forward
- Financial And Managerial AccountingAccountingISBN:9781337902663Author:WARREN, Carl S.Publisher:Cengage Learning,Financial AccountingAccountingISBN:9781337272124Author:Carl Warren, James M. Reeve, Jonathan DuchacPublisher:Cengage Learning