Obj. 4 Wig Creations Company supplies wigs and hair care products to beauty salo

Question

Obj. 4 Wig Creations Company supplies wigs and hair care products to beauty 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, 20Y7: EXCEL TEMPLATE Not Past Days Past Due 3 Customer 4 ABC Beauty 5 Angel Wigs Balance Due 1-30 31-60 61-90 91-120 Over 120 15,000 15,000 8,000 8,000 30 Zodiac Bea 31 Subtotals 3,000 875,000 415,000 210,000 112,000 55,000 18,000 65,000 3,000 The following accounts were unintentionally omitted from the aging schedule Assume all due dates are for the current year except for Visions Hair & Nail, which is due in the next year

Explanation / Answer

2 &3 Balance Not past dues 1-30 31-60 61-90 91-120 Over 120 Subtotals 875000 415000 210000 112000 55000 18000 65000 Arcade beauty 10000 10000 Creative images 8500 8500 Excel hair products 7500 7500 First class hair care 6600 6600 Golden images 3600 3600 Oh that hair 1400 1400 One stop hair designs 4000 4000 Visions hair & nail 9000 9000 Total 925600 424000 214000 117000 63500 24600 82500 Percent uncollectible 1% 4% 16% 25% 40% 80% Uncollectible accounts 123235 4240 8560 18720 15875 9840 66000 4 Uncollectible accounts 123235 Beginning uncollectible accounts 7375 Bad debt expense 115860 Bad debt expense 115860             Allowance for doubtful accounts 115860 5 On balance sheet the omission would cause Assets to be overstated 115860 Retained earnings to be overstated 115860 Income statement Expenses to be understated 115860 Net income to be overstated 115860

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