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, 20Y6:

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:

Customer	Due Date	Balance
Adams Sports & Flies	May 22, 20Y6	$4,900
Blue Dun Flies	Oct. 10, 20Y6	5,200
Cicada Fish Co.	Sept. 29, 20Y6	8,300
Deschutes Sports	Oct. 20, 20Y6	6,800
Green River Sports	Nov. 7, 20Y6	3,800
Smith River Co.	Nov. 28, 20Y6	2,900
Western Trout Company	Dec. 7, 20Y6	7,000
Wolfe Sports	Jan. 20, 20Y7	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

	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.
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, 20Y6. Journalize the adjusting entry for uncollectible accounts. Refer to the chart of accounts for a listing of the account titles the company uses.
5.	Assume that the adjusting entry in (4) was inadvertently omitted, how would the omission affect the balance sheet and income statement?

CHART OF ACCOUNTSTrophy Fish CompanyGeneral Ledger

	ASSETS
110	Cash
111	Petty Cash
121	Accounts Receivable-Adams Sports & Flies
122	Accounts Receivable-Blue Dun Flies
123	Accounts Receivable-Cicada Fish Co.
124	Accounts Receivable-Deschutes Sports
125	Accounts Receivable-Green River Sports
126	Accounts Receivable-Smith River Co.
127	Accounts Receivable-Western Trout Company
128	Accounts Receivable-Wolfe Sports
129	Allowance for Doubtful Accounts
131	Interest Receivable
132	Notes Receivable
141	Merchandise Inventory
145	Office Supplies
146	Store Supplies
151	Prepaid Insurance
181	Land
191	Store Equipment
192	Accumulated Depreciation-Store Equipment
193	Office Equipment
194	Accumulated Depreciation-Office Equipment

	LIABILITIES
210	Accounts Payable
211	Salaries Payable
213	Sales Tax Payable
214	Interest Payable
215	Notes Payable

	EQUITY
310	Owner, Capital
311	Owner, Drawing
312	Income Summary

	REVENUE
410	Sales
610	Interest Revenue

	EXPENSES
510	Cost of Merchandise Sold
520	Sales Salaries Expense
521	Advertising Expense
522	Depreciation Expense-Store Equipment
523	Delivery Expense
524	Repairs Expense
529	Selling Expenses
530	Office Salaries Expense
531	Rent Expense
532	Depreciation Expense-Office Equipment
533	Insurance Expense
534	Office Supplies Expense
535	Store Supplies Expense
536	Credit Card Expense
537	Cash Short and Over
538	Bad Debt Expense
539	Miscellaneous Expense
710	Interest Expense

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
Adams Sports & Flies	May 22, 20Y6	days
Blue Dun Flies	Oct. 10, 20Y6	days
Cicada Fish Co.	Sept. 29, 20Y6	days
Deschutes Sports	Oct. 20, 20Y6	days
Green River Sports	Nov. 7, 20Y6	days
Smith River Co.	Nov. 28, 20Y6	days
Western Trout Company	Dec. 7, 20Y6	days
Wolfe Sports	Jan. 20, 20Y7	days

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.

Aging of Receivables Schedule

December 31, 20Y6

1				Days Past Due	Days Past Due	Days Past Due	Days Past Due	Days Past Due
2	Customer	Balance	Not Past Due	1-30	31-60	61-90	91-120	Over 120
3	AAA Outfitters	20,600.00	20,600.00
4	Brown Trout Fly Shop	7,200.00			7,200.00
5	~~~~~	~~~~~	~~~~~	~~~~~	~~~~~	~~~~~	~~~~~	~~~~~
6	Zigs Fish Adventures	4,200.00		4,200.00
7	Subtotals	1,301,200.00	751,700.00	287,100.00	126,100.00	37,800.00	23,500.00	75,000.00
8	Adams Sports & Flies
9	Blue Dun Flies
10	Cicada Fish Co.
11	Deschutes Sports
12	Green River Sports
13	Smith River Co.
14	Western Trout Company
15	Wolfe Sports
16	Total
17	Percentage uncollectible
18	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 Trophy Fish Company has a debit balance of $4,000 before adjustment on December 31, 20Y6. Journalize the adjusting entry for uncollectible accounts. Refer to the chart of accounts for a listing of the account titles the company uses.

PAGE 10

JOURNAL

ACCOUNTING EQUATION

	DATE	DESCRIPTION	POST. REF.	DEBIT	CREDIT	ASSETS	LIABILITIES	EQUITY
1
2

Answer 1

Part 1

Customer	Due Date	Number of Days past due
Adams Sports & Flies	May 22, 20Y6	223 days	(9+30+31+31+30+31+30+31)
Blue Dun Flies	Oct. 10, 20Y6	82 days	(21+30+31)
Cicada Fish Co.	Sept. 29, 20Y6	93 days	(1+31+30+31)
Deschutes Sports	Oct. 20, 20Y6	72 days	(11+30+31)
Green River Sports	Nov. 7, 20Y6	54 days	(23+31)
Smith River Co.	Nov. 28, 20Y6	33 days	(2+31)
Western Trout Company	Dec. 7, 20Y6	24 days	24
Wolfe Sports	Jan. 20, 20Y7	Not past due

Part 2 & 3

Aging of Receivables Schedule December 31, 20Y6
Customer	Balance	Not past due	Day pas due
			1-30	31-60	61-90	91-120	Over 120
AAA Outfitters	20,600.00	20,600.00
Brown Trout Fly Shop	7,200.00			7,200.00
Zigs Fish Adventures	4,200.00		4,200.00
Subtotals	1,301,200.00	751,700.00	287,100.00	126,100.00	37,800.00	23,500.00	75,000.00
Adams Sports & Flies	4,900						4900
Blue Dun Flies	5,200				5200
Cicada Fish Co.	8,300					8300
Deschutes Sports	6,800				6800
Green River Sports	3,800			3800
Smith River Co.	2,900			2900
Western Trout Company	7,000		7000
Wolfe Sports	4,400	4400
Totals	13,44,500.00	7,56,100.00	2,94,100.00	1,32,800.00	49,800.00	31,800.00	79,900.00
Percentage uncollectible		1%	2%	8%	30%	39%	80%
Estimate of uncollectible accounts	115329.00	7561.00	5882.00	10624.00	14940.00	12402.00	63920.00

Part 4

DATE	DESCRIPTION	POST. REF.	DEBIT	CREDIT	ASSETS	LIABILITIES	EQUITY
December 31, 20Y6	Bad debt expense		119329				(119329)
December 31, 20Y6	Allowance for doubtful accounts			119329	(119329)

(115329+4000) = 119329

Date	Description	Debit	Credit
December 31, 20Y6	Bad debt expense	119329
	Allowance for doubtful accounts (115329+4000)		119329