Chapter 8, Problem 8.2APR

Aging of receivables; estimating allowance for doubtful accounts

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, 20Y4:

The following accounts were unintentionally omitted from the aging schedule. Assume all due dates are for the current year except for Wolfe Sports, which is due in the next year.

Customer	Due Date	Balance
Adams Sports & Flies	May 22	$5,000
Blue Dun Flies	Oct. 10	4,900
Cicada Fish Co.	Sept. 29	8,400
Deschutes Sports	Oct. 20	7,000
Green River Sports	Nov. 7	3,500
Smith River Co.	Nov. 28	2,400
Western Trout Company	Dec. 7	6,800
Wolfe Sports	Jan. 20	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

Instructions

1. 1. Determine the number of days past due for each of the preceding accounts.
2. 2. Complete the aging of receivables schedule by adding the omitted accounts to the bottom of the schedule and updating the totals.
3. 3. Estimate the allowance for doubtful accounts, based on the aging of receivables schedule.
4. 4. Assume that the allowance for doubtful accounts for Trophy Fish Company has a debit balance of $3,600 before adjustment on December 31. Journalize the adjusting entry for uncollectible accounts.
5. 5. Assume that the adjusting entry in (4) was inadvertently omitted, how would the omission affect the balance sheet and income statement?