Question

Instructions Trophy Fish Company supplies flies and fishing gear 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, 20Y4: Not Days Past Due Days Past Due Days Past Due Days Past Due Days Past Due Past Customer Balance Due 1-30 31-60 61-90 91-120 Over 120 AAA Outfitters 19,000.00 19,000.00 7,800.00 5 Brown Trout Fly Shop 7,800.00 8 Zigs Fish Adventures 4,000.00 1,301,600.00 4,000.00 294,100.00 Subtotals 743,000.00 120,000.00 40,200.00 23,500.00 81,000.00 The following accounts were unintentionally omitted from the aging schedule. Assume all due dates are for the current year except for Wolfe Sports, which is due in the next year. Customer Due Date Balance Adams Sports & Flies $4,800 Blue Dun Flies Cicada Fish Co. Deschutes Sports Green River Sports May 22 Oct. 10 Sept. 29 Oct. 20 Nov. 7 Nov. 28 Dec. 7 5,200 8,000 6,600 3,500 2,000 6,600 4,000 Smith River Co. Western Trout Company Wolfe Sports Jan. 20 Trophy Fish has a past history of uncollectible accounts by age category, as follows: Age Class Percent Uncollectible Not past due 1-30 days past due 31-60 days past due 61-90 days past due 91-120 days past due Over 120 days past due 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. 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 Company has a debit balance of $3,500 before adjustment on December 31. Journalize the adjusting entry for uncollectible accounts. Refer to the Chart of Accounts for exact wording of account titles. 5. Assume that the adjusting entry in (4) was inadvertently omitted, how would the omission affect the balance sheet and income statement?

Answer 1

Ans 1 Working for Number of Days Outstanding July 2014 August 2014 Sep 2014 Oct 2014 Nov 2014 Dec 2014 Cusmer Due Date Balance May 2014 June 2014 Total Number of Days Past 223 82 311 31 21 31 93 Adams Sports & Files Blue Dun Files Cicada Fish Co. Deschute Sports Green River Sports Smith River Co Western Trout Company Wolfe Sports May 22' 2014 Oct 10' 2014 Sep 29' 2014 Oct 20' 2014 Nov 7' 2014 Nov 28' 2014 Dec 7' 2014 Jan 20' 2015 $4,800 $5,200 $8,000 $6,600 $3,500 $2,000 $6,600 $4,000 31/ - 31 54 OOOOOO 33 24

Ans 2 Trophy Fish Company Ageing of Receivable Schedule December 31, 2014 Days past Balance Not past Due due 1-30 $19,000 $19,000 $7,800 Customer Days past | Days past due 31-60 due 61-90 Days past | Days past due 91-120 due over 120 AAA Outfitter Brown Trout Fly Shop $7,800 $7,43,000 | $2,94,100 $1,20,000 $40,200 $23,300 $81,000 $4,800 $5,200 $8,000 Zig Fish Adventures Subtal Adams Sports & Files Blue Dun Files Cicada Fish Co. Deschute Sports Green River Sports Smith River Co Western Trout Company Wolfe Sports Totals (A) Percentage Uncollectible (%) (B) Estimate of Uncollectible Accounts (A) x (B) $4,000 $13,01,600 $4,800 $5,200 $8,000 $6,600 $3,500 $2,000 $6,600 $0 $13,38,300 $6,600 $3,500 $2,000 $6,600 $7,43,000 1% $3,00,700 3% $9,021 $1,25,500 12% $15,060 $46,800 30% $14,040 $36,500 40% $14,600 $85,800 78% $66,924 $1,27,075 $7,430 Ans 3 The allowace for doubtfull accounts based on ageing of receivable is $1,27,075 Ans 4 The allowace for doubtfull accounts based on ageing of receivable is Add: Debit balance in Allowance for Doubtful accounts before adj. entry Bad Debt Entry to be passed $1,27,075 $3,500 $1,30,575 Post Ref Credit Assets Liabilities Equity Journal Entry Date Description Dec 31, Bad Debt Expense Allowance for doubtful accounts Debit $1,30,575 $1,30,575