Aging of Receivables; Estimating Allowance for Doubtful Accounts Trophy Fish Com
ID: 2581650 • Letter: A
Question
Aging of Receivables; Estimating Allowance for Doubtful Accounts
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:
The following accounts were unintentionally omitted from the aging schedule:
Trophy Fish 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.
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.
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 has a credit balance of $4,200 before adjustment on December 31, 20Y7. 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 stockholders’ equity (retained earnings) would be by $because bad debt expense would be and net income by $ on the income statement.
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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 7,500 7,500 Zigs Fish Adventures 4,500 4,500 Subtotals 1,283,400 740,900 293,200 113,100 35,100 22,000 79,100Explanation / Answer
1 Customer Due Date Number of Days Past Due Adams Sports and Flies May-22 223 days Blue Dun Flies Oct. 10 82 Days Cicada Fish Co. Sept. 29 93 Days Deschutes Sports Oct. 20 72 Days Green River Sports Nov. 7 54 Days Smith River Co. Nov. 28 33 Days Western Trout Company Dec. 7 24 Days Wolfe Sports Jan. 20 345 Days 2 Trophy Fish Company Aging of Receivables Schedule December 31, 20Y7 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 AAA Outfitters 19,900 19,900 Brown Trout Fly Shop 7,500 7,500 Zigs Fish Adventures 4500 4500 Subtotals 1,283,400 740,900 293,200 113,100 35,100 22,000 79,100 Adams Sports and Flies 5,100 5100 Blue Dun Flies 5,200 5200 Cicada Fish Co. 8,300 8300 Deschutes Sports 7,500 7500 Green River Sports 3,100 3100 Smith River Co. 2,000 2000 Western Trout Company 6,600 6600 Wolfe Sports 4,300 4300 Totals 1,325,500 740,900 299,800 118,200 47,800 30,300 88,500 Percent uncollectible (%) 1% 2% 9% 30% 40% 79% Estimate of uncollectible accounts 120418 7409 5996 10638 14340 12120 69915 3 Estimate of uncollectibel accounts is $120418 4 Entry would be Bad Debt Expense A/c Dr. 116218 To Provision for Doubtful Debts 116218