M5 CNOW Homework (Ch 8) eBook Question Content Area Aging of receivables estimating allowance for doubtful accounts Wig Creations 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 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 ABC Beauty 19,700 19,700 Angel Wigs 7,300 7,300 Zodiac Beauty 3,700 3,700 Subtotals 1,293,300 751,200 286,700 128,200 35,700 15,100 76,400 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 August 17 $4,700 Creative Images October 30 5,000 Excel Hair Products July 3 8,800 First Class Hair Care September 8 6,500 Golden Images November 23 3,600 Oh That Hair November 29 2,700 One Stop Hair Designs December 7 6,700 Visions Hair Nail January 11 4,100 Wig Creations has a past history of uncollectible accounts by age category, as follows Age Class Percent Uncollectible Not past due 1 1 30 days past due 2 31 60 days past due 10 61 90 days past due 32 91 120 days past due 42 Over 120 days past due 78 Required Question Content Area 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 August 17 fill in the blank 1 of 8 136 days Creative Images October 30 fill in the blank 1 of 8 62 days Excel Hair Products July 3 fill in the blank 1 of 8 181 days First Class Hair Care September 8 fill in the blank 1 of 8 114 days Golden Images November 23 fill in the blank 1 of 8 38 days Oh That Hair November 29 fill in the blank 1 of 8 32 days One Stop Hair Designs December 7 fill in the blank 1 of 8 24 days Visions Hair Nail January 11 fill in the blank 1 of 8 0 days Feedback Area 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 Question Content Area 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 Wig Creations 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 ABC Beauty 19,700 19,700 blank blank blank blank blank Angel Wigs 7,300 blank blank 7,300 blank blank blank Zodiac Beauty 3,700 blank 3,700 blank blank Subtotals 1,293,300 751,200 286,700 128,200 35,700 15,100 76,400 Arcade Beauty Arcade Beauty 4,700 Arcade Beauty Arcade Beauty Arcade Beauty Arcade Beauty Arcade Beauty Arcade Beauty 4,700 Creative Images Creative Images 5,000 Creative Images Creative Images Creative Images Creative Images 5,000 Creative Images Creative Images Excel Hair Products Excel Hair Products 8,800 Excel Hair Products Excel Hair Products Excel Hair Products Excel Hair Products Excel Hair Products Excel Hair Products 8,800 First Class Hair Care First Class Hair Care 6,500 First Class Hair Care First Class Hair Care First Class Hair Care First Class Hair Care First Class Hair Care 6,500 First Class Hair Care Golden Images Golden Images 3,600 Golden Images Golden Images Golden Images 3,600 Golden Images Golden Images Golden Images Oh That Hair Oh That Hair 2,700 Oh That Hair Oh That Hair Oh That Hair 2,700 Oh That Hair Oh That Hair Oh That Hair One Stop Hair Designs One Stop Hair Designs 6,700 One Stop Hair Designs One Stop Hair Designs 6,700 One Stop Hair Designs One Stop Hair Designs One Stop Hair Designs One Stop Hair Designs Visions Hair Nail Visions Hair Nail 4,100 Visions Hair Nail 4,100 Visions Hair Nail Visions Hair Nail Visions Hair Nail Visions Hair Nail Visions Hair Nail Totals Totals 1,334,700 Totals 755,300 Totals 293,400 Totals 134,500 Totals 40,700 Totals 21,600 Totals 63,102 Percent uncollectible ( ) Percent uncollectible ( ) 1 Percent uncollectible ( ) 2 Percent uncollectible ( ) 10 Percent uncollectible ( ) 32 Percent uncollectible ( ) 42 Percent uncollectible ( ) 78 Estimate of uncollectible accounts $Estimate of uncollectible accounts $Estimate of uncollectible accounts $Estimate of uncollectible accounts $Estimate of uncollectible accounts $Estimate of uncollectible accounts $Estimate of uncollectible accounts $Estimate of uncollectible accounts Feedback Area Feedback Add the accounts into the aging schedule based on their number of days past due Apply the respective uncollectible percentage to the total receivables in each days past due group and the not past due group Question Content Area 3 Estimate the allowance for doubtful accounts, based on the aging of receivables schedule fill in the blank 1 of 1$ Feedback Area 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 Question Content Area 4 Assume that the allowance for doubtful accounts for Wig Creations has a credit balance of $3,000 before adjustment on December 31, 20Y7 Journalize the adjustment for uncollectible accounts If an amount box does not require an entry, leave it blank DateAccountDebitCredit Dec 31 Feedback Area Feedback The amount of bad debt expense is affected by the balance in the allowance account Question Content Area 5 Assuming that the adjusting entry in (4) was inadvertently omitted, how would the omission affect the balance sheet and income statement On the balance sheet, assets would be fill in the blank 1 of 9 by fill in the blank 2 of 9$ because the allowance for doubtful accounts would be fill in the blank 3 of 9 by fill in the blank 4 of 9$ In addition, the owner's equity (owner's capital) would be fill in the blank 5 of 9 by fill in the blank 6 of 9$ because bad debt expense would be fill in the blank 7 of 9 and net income fill in the blank 8 of 9 by fill in the blank 9 of 9$ on the income statement Feedback Area 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 Feedback Area Feedback Partially correct Check My Work PreviousNext

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Question: M5 CNOW Homework (Ch 8) eBook Question Content Area Aging of receivables; estimating allowance for doubtful accounts Wig Creations supplies wigs and hair care products

M5 CNOW Homework (Ch 8)

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Question Content Area

Aging of receivables; estimating allowance for doubtful accounts

Wig Creations 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:

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

ABC Beauty 19,700 19,700

Angel Wigs 7,300 7,300

Zodiac Beauty 3,700 3,700

Subtotals 1,293,300 751,200 286,700 128,200 35,700 15,100 76,400

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 August 17 $4,700

Creative Images October 30 5,000

Excel Hair Products July 3 8,800

First Class Hair Care September 8 6,500

Golden Images November 23 3,600

Oh That Hair November 29 2,700

One Stop Hair Designs December 7 6,700

Visions Hair & Nail January 11 4,100

Wig Creations has a past history of uncollectible accounts by age category, as follows:

Age Class Percent Uncollectible

Not past due 1%

1-30 days past due 2

31-60 days past due 10

61-90 days past due 32

91-120 days past due 42

Over 120 days past due 78

Required:

Question Content Area

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 August 17 fill in the blank 1 of 8

136

days

Creative Images October 30 fill in the blank 1 of 8

days

Excel Hair Products July 3 fill in the blank 1 of 8

181

days

First Class Hair Care September 8 fill in the blank 1 of 8

114

days

Golden Images November 23 fill in the blank 1 of 8

days

Oh That Hair November 29 fill in the blank 1 of 8

days

One Stop Hair Designs December 7 fill in the blank 1 of 8

days

Visions Hair & Nail January 11 fill in the blank 1 of 8

days

Feedback Area

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.

Question Content Area

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.

Wig Creations

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

ABC Beauty 19,700 19,700 blank blank blank blank blank

Angel Wigs 7,300 blank blank 7,300 blank blank blank

Zodiac Beauty 3,700 blank 3,700 blank blank

Subtotals 1,293,300 751,200 286,700 128,200 35,700 15,100 76,400

Arcade Beauty Arcade Beauty

4,700

Arcade Beauty

4,700

Creative Images Creative Images

5,000

Creative Images

5,000

Creative Images

Excel Hair Products Excel Hair Products

8,800

Excel Hair Products

8,800

First Class Hair Care First Class Hair Care

6,500

First Class Hair Care

6,500

First Class Hair Care

Golden Images Golden Images

3,600

Golden Images

3,600

Golden Images

Oh That Hair Oh That Hair

2,700

Oh That Hair

2,700

Oh That Hair

One Stop Hair Designs One Stop Hair Designs

6,700

One Stop Hair Designs

6,700

One Stop Hair Designs

Visions Hair & Nail Visions Hair & Nail

4,100

Visions Hair & Nail

4,100

Visions Hair & Nail

Totals Totals

1,334,700

Totals

755,300

Totals

293,400

Totals

134,500

Totals

40,700

Totals

21,600

Totals

63,102

Percent uncollectible (%) Percent uncollectible (%)

% Percent uncollectible (%)

Estimate of uncollectible accounts $Estimate of uncollectible accounts

$Estimate of uncollectible accounts

Feedback Area

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.

Question Content Area

3. Estimate the allowance for doubtful accounts, based on the aging of receivables schedule.

fill in the blank 1 of 1$

Feedback Area

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.

Question Content Area

4. Assume that the allowance for doubtful accounts for Wig Creations has a credit balance of $3,000 before adjustment on December 31, 20Y7. Journalize the adjustment for uncollectible accounts. If an amount box does not require an entry, leave it blank.

DateAccountDebitCredit

Dec. 31

Feedback Area

Feedback

The amount of bad debt expense is affected by the balance in the allowance account.

Question Content Area

5. Assuming 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 fill in the blank 1 of 9

by fill in the blank 2 of 9$

because the allowance for doubtful accounts would be fill in the blank 3 of 9

by fill in the blank 4 of 9$

. In addition, the owner's equity (owner's capital) would be fill in the blank 5 of 9

by fill in the blank 6 of 9$

because bad debt expense would be fill in the blank 7 of 9

and net income fill in the blank 8 of 9

by fill in the blank 9 of 9$

on the income statement.

Feedback Area

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.

Feedback Area

Feedback

Partially correct

Check My Work

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