Looks Good Wigs Company supplies wigs and hair care products to beauty salons throughout California and the Pacific Northwest. The accounts receivable clerk for Looks Good prepared the following partially completed aging of receivables schedule as of the end of business on December 31, 2007:
|
Not |
Days Past Due |
||||||
|
Past |
|||||||
|
Customer |
Balance |
Due |
1–30 |
31–60 |
61–90 |
91–120 |
Over 120 |
|
Daytime Beauty |
20,000 |
20,000 |
|||||
|
Blount Wigs |
11,000 |
11,000 |
|||||
|
Zabka’s |
2,900 |
2,900 |
|||||
|
Subtotals |
780,000 |
398,600 |
197,250 |
98,750 |
33,300 |
29,950 |
22,150 |
The following accounts were unintentionally omitted from the aging schedule:
|
Customer |
Due Date |
Balance |
|
Uniquely Yours |
July 1, 2007 |
$1,200 |
|
Paradise Beauty Store |
Sept. 29, 2007 |
1,050 |
|
Morgan’s Hair Products |
Oct. 17, 2007 |
800 |
|
Hairy’s Hair Care |
Oct. 31, 2007 |
2,000 |
|
Superior Images |
Nov. 18, 2007 |
700 |
|
Oh The Hair |
Nov. 30, 2007 |
3,500 |
|
Mountain Coatings |
Dec. 1, 2007 |
1,000 |
|
Theatrical Images |
Jan. 3, 2008 |
6,200 |
Looks Good Wigs has a past history of uncollectible accounts by age category, as follows:
|
|
Percent |
|
Age Class |
Uncollectible |
|
Not past due |
2% |
|
1–30 days past due |
4 |
|
31–60 days past due |
10 |
|
61–90 days past due |
15 |
|
91–120 days past due |
35 |
|
Over 120 days past due |
80 |
Instructions
1. Determine the number of days past due for each of the preceding accounts.
2. Complete the aging of receivables schedule.
3. Estimate the allowance for doubtful accounts, based on the aging of receivables schedule.
4. Assume that the allowance for doubtful accounts for Looks Good Wigs has a credit balance of $9,550 before adjustment on December 31, 2007. Journalize the adjustment for uncollectible accounts.