Estimating Allowance for Doubtful Accounts Wig Creations Company supplies wigs and hair care products to beauty salons throughout Texas and the Southwest

 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 Crea 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 871,200 483,600 209,100 95,800 32,200 28,700 21,800 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 5,700 Excel Hair Products Oct. 17, 20Y1 800 First Class Hair Care Oct. 24, 2011 1,900 Golden Images Nov. 23, 20Y1 600 Oh The Hair Nov. 29, 20Y1 3,300 One Stop Hair Designs Dec. 2, 20Y1 2,100 Visions Hair and Nail Jan. 5, 20Y2 7,000 Wig Creations has a past history of uncollectible accounts by age category, as follows:
Percent Age Class Uncollectible Not past due 1 % 1-30 days past due 3 31-60 days past due 10 61-90 days past due 15 91-120 days past due 35 Over 120 days past due 75 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, 2011 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, 2011 days Oh The Hair Nov. 29, 20Y1 days One Stop Hair Designs Dec. 2, 20Y1 days Visions Hair and Nail Jan. 5, 2012 days
Wig Creations Company Aging of Receivables Schedule December 31, 20Y1 Days Past Days Past Due Days Past Due Due 1-30 31-60 61-90 Customer Balance Not Past Due 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% 10% 15% 35% 75% 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 $1,880 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 bad debt expense would be statement. by because the allowance for doubtful accounts would be In addition, the owner's capital account would be by and net income by on the income