Question

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:

1			Not	Days Past Due	Days Past Due	Days Past Due	Days Past Due	Days Past Due
2			Past
3	Customer	Balance	Due	1-30	31-60	61-90	91-120	Over 120
4	AAA Outfitters	20,600.00	20,600.00
5	Brown Trout Fly Shop	7,200.00			7,200.00
6	~~~~~	~~~~~	~~~~~	~~~~~	~~~~~	~~~~~	~~~~~	~~~~~
7
8	Zigs Fish Adventures	4,200.00		4,200.00
9	Subtotals	1,301,200.00	751,700.00	287,100.00	126,100.00	37,800.00	23,500.00	75,000.00

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	May 22	$4,900
Blue Dun Flies	Oct. 10	5,200
Cicada Fish Co.	Sept. 29	8,300
Deschutes Sports	Oct. 20	6,800
Green River Sports	Nov. 7	3,800
Smith River Co.	Nov. 28	2,900
Western Trout Company	Dec. 7	7,000
Wolfe Sports	Jan. 20	4,400

Trophy Fish 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	8
61–90 days past due	30
91–120 days past due	39
Over 120 days past due	80

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 $4,000 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

	Aging Schedule
			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
1	AAA Outfitters	20,600	20,600
2	Brown Trout Fly Shop	7,200			7,200
3	Zigs Fish Adventures	4,200		4,200
4	Adams Sports & Flies	4,900						4,900
5	Blue Dun Flies	5,200				5,200
6	Cicada Fish Co.	8,300					8,300
7	Deschutes Sports	6,800				6,800
8	Green River Sports	3,800			3,800
9	Smith River Co.	2,900			2,900
10	Western Trout Company	7,000		7,000
11	Wolfe Sports	4,400	4,400
12	Misc(others)	12,25,900	7,26,700	2,75,900	1,12,200	25,800	15,200	70,100
		13,01,200	7,51,700	2,87,100	1,26,100	37,800	23,500	75,000
	Percentage Uncollectable		1%	2%	8%	30%	39%	80%
	Allowance for doubtful Accounts	1,03,852	7,517	5,742	10,088	11,340	9,165	60,000

4. The allowance for doubtful Account has a debit balance of $4,000/- means the Bad debts write offs has exceeded previous provision by $4,000, so the Journal entry will be made on 31-Dec-2014

Bad Debts Expenses Dr 107,852

To Allowance for Doubtful Accounts Cr $107,852

5. If the adjustment entry is omitted, The Balance sheet will show Receivable at a higher amount by $107,852 and the Income statement wil show the Profit higher by $107,852