Trophy Fish Company supplies flies and fishing gear to sporting goods stores and
ID: 2462423 • Letter: T
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, 2015:
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
20,000.00
20,000.00
5
Brown Trout Fly Shop
7,500.00
7,500.00
6
~~~~~
~~~~~
~~~~~
~~~~~
~~~~~
~~~~~
~~~~~
~~~~~
7
8
Zigs Fish Adventures
4,000.00
4,000.00
9
Subtotals
1,300,000.00
750,000.00
290,000.00
120,000.00
40,000.00
20,000.00
80,000.00
The following accounts were unintentionally omitted from the aging schedule:
Customer
Due Date
Balance
Adams Sports & Flies
May 22, 2015
$5,000
Blue Dun Flies
Oct. 10, 2015
4,900
Cicada Fish Co.
Sept. 29, 2015
8,400
Deschutes Sports
Oct. 20, 2015
7,000
Green River Sports
Nov. 7, 2015
3,500
Smith River Co.
Nov. 28, 2015
2,400
Western Trout Company
Dec. 7, 2015
6,800
Wolfe Sports
Jan. 20, 2016
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
10
61–90 days past due
30
91–120 days past due
40
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 $3,600 before adjustment on December 31, 2015. 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 ACCOUNTS
Trophy Fish Company
General 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, 2015
days
Blue Dun Flies
Oct. 10, 2015
days
Cicada Fish Co.
Sept. 29, 2015
days
Deschutes Sports
Oct. 20, 2015
days
Green River Sports
Nov. 7, 2015
days
Smith River Co.
Nov. 28, 2015
days
Western Trout Company
Dec. 7, 2015
days
Wolfe Sports
Jan. 20, 2016
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, 2015
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
20,000.00
20,000.00
4
Brown Trout Fly Shop
7,500.00
7,500.00
5
~~~~~
~~~~~
~~~~~
~~~~~
~~~~~
~~~~~
~~~~~
~~~~~
6
Zigs Fish Adventures
4,000.00
4,000.00
7
Subtotals
1,300,000.00
750,000.00
290,000.00
120,000.00
40,000.00
20,000.00
80,000.00
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
Totals
17
Percentage uncollectible
18
Estimate of uncollectible accounts
3. Estimate the allowance for doubtful accounts, based on the aging of receivables schedule.
$
. Assume that the allowance for doubtful accounts for Trophy Fish Company has a debit balance of $3,600 before adjustment on December 31, 2015. 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
DATE
DESCRIPTION
POST. REF.
DEBIT
CREDIT
1
2
5. Assume 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 by because the allowance for doubtful accounts would be by . In addition, the owner’s capital account would be by because bad debt expense would be and net income by on the income statement.
Explanation / Answer
Year end date 12/31/2015 1 Customer Due Date No of Days Past dued Balance Adams Sports & Flies 5/22/2015 223.00 $5,000 Blue Dun Flies 10/10/15 82.00 4,900 Cicada Fish Co. 09/29/15 93.00 8,400 Deschutes Sports 10/20/15 72.00 7,000 Green River Sports 11/07/15 54.00 3,500 Smith River Co. 11/28/15 33.00 2,400 Western Trout Company 12/07/15 24.00 6,800 Wolfe Sports 01/20/16 -20.00 4,400 1 Days Past Due Days Past Due Days Past Due Days Past Due Days Past Due Total 2 Customer Balance Not Past Due 1-30 31-60 61-90 91-120 Over 120 3 AAA Outfitters 20,000 20,000 4 Brown Trout Fly Shop 7,500 7,500 5 ~~~~~ 0 0 0 0 0 0 0 6 Zigs Fish Adventures 4,000 4,000 7 Subtotals 1,300,000 750,000 290,000 120,000 40,000 20,000 80,000 8 Adams Sports & Flies $5,000 9 Blue Dun Flies 4,900 10 Cicada Fish Co. 8,400 11 Deschutes Sports 7,000 12 Green River Sports 3,500 13 Smith River Co. 0 2,400 14 Western Trout Company 6,800 15 Wolfe Sports 4400 16 Totals 24,400 10,800 13,400 11,900 8,400 $5,000 17 Percentage uncollectible 1% 2% 10% 30% 40% 80% 18 Estimate of uncollectible accounts 244 216 1340 3570 3360 4000 12,730 The given subtotal row is confusing, row no 5 is missing. Both ommitted as no information provided, 3 Allowance for doubtful a/cs= $ 12,730 4 Whenallowance a/c has Dr balance of 3600 The JV is Date Account Title Dr $ Cr $ Dec 31.2015. Allowance for Doubtful A/cs 16,330 Bad Debt Expenses 16,330 5 If the entry in 4 is ommitted, the Income statement and owners capital will be overstated by $3600 as bad debt expense understated by $3600. the Allowance for doubtful a/cs will be understated by $3600
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