Question

Calculator Printem Wig Creations Company supplies wigs and hair care products to benuty 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, 2011: Days Past Due Customer Balance Not Past Due 1-30 31-60 61-90 01-120 over 120 Subtotals 891,600 494,800 214,000 98,100 33,000 29,400 22,300 The following accounts were unintentionally omitted from the aging schedule: Customer Due Date Balance Arcade Beauty May 28, 2011 $3,200 Creative Images Sept. 7, 201 6,700 Excel Hair Products Oct. 17, 20Y1 First Class Hair Care Oct. 24, 2011 2,200 Nov. 23, 2011 700 Golden Images 3,900 Oh The Hair Nov. 29, 2011 Dec. 2, 2011 2,500 One Stop Hair Designs 8,200 Jan. 5, 2012 Visions Hair and Nail 900 Wig Creations has a past history of uncollectible accounts by age category, as follows: Percent Uncollectible Age Class Not past due

Answer 1

	Customer		Due date	Number of days past due
	Arcade beauty		May. 28	217	days
	Creative images		Sept. 7	115	days
	Excel hair products		Oct 17.	75	days
	First class hair care		Oct 24.	114	days
	Golden images		Nov. 23	38	days
	Oh that hair		Nov. 29	32	days
	One stop hair designs		Dec. 2	29	days
	Visions hair & nail		Jan. 5	Not yet due
	(Due in next year)
2			Aging of receivables schedule
	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
	Subtotals		891600	494800	214000	98100	33000	29400	22300
	Arcade beauty		3200						3200
	Creative images		6700					6700
	Excel hair products		900				900
	First class hair care		2200					2200
	Golden images		700			700
	Oh that hair		3900			3900
	One stop hair designs		2500		2500
	Visions hair & nail		8200	8200
	Totals                                                       a		919900	503000	216500	102700	33900	38300	25500
	Percent uncollectible                      b			2%	4%	10%	15%	35%	80%
	Estimate of uncollectible accounts (a*b)			10060	8660	10270	5085	13405	20400
3	Estimated allowance for doubtful accounts=8660+10270+5085+13405+20400=$ 57820
4	Estimated allowance for doubtful accounts=$ 57820
	Current balance in allowance for doubtful accounts=$ 1550
	Bad debt expense to be recognized=57820-1550=$ 56270
	Date	Particulars	Debit	Credit
	Dec 31.	Bad debt expense	56270
		Allowance for doubtful accounts		56270
5	On the balance sheet,assets would be overstated by $ 56270 because the allowance for doubtful accounts would be understated by $ 56270.
	In addition,the stockholder's equity (retained earnings) would be overstated by $ 56270 because bad debt expense would be understated and net income overstated by $ 56270 on the income statement
	I appreciate your ratings