Please help, I don’t know what I did wrong Aging of Receivables; Estimating Allo
ID: 2406461 • Letter: P
Question
Please help, I don’t know what I did wrong
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:
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.
Wig Creations has a past history of uncollectible accounts by age category, as follows:
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.
Feedback
Count the number of days after the due date up to December 31. Do not include the due date in your count. Remember that not all months have an equal number of days.
Learning Objective 4.
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.
Feedback
Add the accounts into the aging schedule based on their number of days past due.
Apply the respective uncollectible percentage to the total receivables in each days past due group and the not past due group.
Learning Objective 4.
3. Estimate the allowance for doubtful accounts, based on the aging of receivables schedule.
$
Feedback
Add the accounts into the aging schedule based on their number of days past due.
Apply the respective uncollectible percentage to the total receivables in each days past due group and the not past due group.
Learning Objective 4.
4. Assume that the allowance for doubtful accounts for Wig Creations has a credit balance of $7,375 before adjustment on December 31. Journalize the adjustment for uncollectible accounts.
Feedback
The amount of bad debt expense is affected by the balance in the allowance account.
Learning Objective 4.
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.
Feedback
Consider the effects of a contra asset not being recorded in terms of the balance sheet equation.
Consider the effects of an expense not being reported in terms of the income equation.
Learning Objective 4.
Not Days Past Due Past Customer Balance Due 1-30 31-60 61-90 91-120 Over 120 ABC Beauty 15,000 15,000 Angel Wigs 8,000 8,000 Zodiac Beauty 3,000 3,000 Subtotals 875,000 415,000 210,000 112,000 55,000 18,000 65,000 Aging of Receivalles; Estimating Allowance for Doubtful Accounts Wig Creations Company supplies wigs and hailr care products to beauty salons throughout Teas and the Southweist. The accounts receivable derk for Wig Creations prepared the follewing partialy completed aging of receivables schedule as of the end of business on December 31, 20Y7: Not Past Due 15,000 Days Past Due Balance 15,000 8,000 1-30 31-60 61-9091-120 Over 120 ABC Beauty Angel Wigs 8,000 Zodiac Bauty 3,000 3,000 875,000 15,000 210,000 112,000 55,000 18,00 65,000 The folloning accounts were unintentionally omitted from the aging schedule. Assune al due dates are for the current year excet for Visions Hair &Nail;, which is due in the nest year Due Date Aug 17 10,000 8,500 2 s00 6400 Beauty Creative Images xcel Halr Products First Class Hair Care Sept,Explanation / Answer
Please hit LIKE button if this helped. For any further explanation, please put your query in comment, will get back to you. 1. (31 Dec 2017-Due Date) Customer Due date Number of Days past due Arcade Beauty Aug-18 136 31-Dec Creative Images 30-Oct 62 Excel Hair Products 03-Jul 181 First Class Hair Care 08-Sep 114 Golden Images 23-Nov 38 Oh That Hair 29-Nov 32 One Stop Hair Designs 07-Dec 24 Visions Hair & Nail 11-Jan 0 2 Customer Balance Not past Due 1-30 31-60 61-90 91-120 over 120 ABC Beauty 15000 15000 Angel Wigs 8000 8000 Zodiac 3000 3000 Subtotals 875000 415000 210000 112000 55000 18000 65000 Arcade Beauty 10000 10000 Creative Images 8500 8500 Excel Hair Products 7500 7500 First Class Hair Care 6600 6600 Golden Images 3600 3600 Oh That Hair 1400 1400 One Stop Hair Designs 4000 4000 Visions Hair & Nail 9000 9000 Total 925600 424000 214000 117000 63500 24600 82500 % Uncollectible 1 4 16 25 40 80 3. Estimate of Uncollectible Accounts 123235 4240 8560 18720 15875 9840 66000 4 Bad Debt Expense Debit 115860 123235-7375 Allowance for Uncollectible Accounts Credit 115860 5. Assets to be Overstated by 115860 Owner's Capital to be Overstated by 115860 Expenses to be Understated by 115860 Net Income to be Overstated by 115860