Trophy Fish Company supplies flies and fishing gear to sporting goods stores and

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: The following accounts were unintentionally omitted from the aging schedule: Trophy Fish has a past history of uncollectible accounts by age category, as follows: Determine the number of days past due for each of the preceding accounts. Complete the aging of receivables schedule by adding the omitted accounts to the bottom of the schedule and updating the totals. 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 53,600 before adjustment on December 31,2015. Journalize the adjusting entry for uncollectible accounts. Assume that the adjusting entry in (4) was inadvertently omitted, how would the omission affect the balance sheet and income statement?

Explanation / Answer

1) Customer Due Date Number of days past due Adams May 22, 2015 9+30+31+31+30+31+30+31 223 Blue Oct 10, 2015 21+30+31 82 Cicada Sept 29, 2015 1+31+30+31 93 Deschutes Oct 20, 2015 11+30+31 72 Green River Nov 7, 2015 23+31 54 Smith River Nov 28, 2015 2+31 33 Western Dec 7, 2015 24 24 Wolfe Jan 20, 2016 Not past due 2) and 3) Aging-of-Receivables Schedule 31st Dec 2015 Days Past due Customers Balance Not passed due 1 - 30 31-60 61-90 91-120 over 120 AAA outfitters $20,000 $20,000 Brown Fly Trout Shops $75,000 $7,500 Zigs Fish Adventure $4,000 $4,000 Subtotals $1,300,000 $750,000 $290,000 $120,000 $40,000 $20,000 $80,000 Adams $5,000 $5,000 Blue $4,900 $4,900 Cicada $8,400 $8,400 Deschutes $7,000 $7,000 Green River $3,500 $3,500 Smith River $2,400 $2,400 Western $6,800 $6,800 Wolfe $4,400 $4,400 Total $1,342,400 $754,400 $296,800 $125,900 $51,900 $28,400 $85,000 Percent uncollectible 1.00% 2.00% 10.00% 30.00% 40.00% 80.00% Estimate of doubtful accounts $121,000 $7,544 $5,936 $12,590 $15,570 $11,360 $68,000 4) Bad Debt Expense $124,600 Allowance for Doubtful Accounts $124,600 Uncollectible accounts estimate = $121,000+3600

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