PR 9-2A Wigs Plus Company supplies wigs and hair care products to beauty salons throughout California and the Pacific Northwest. The accounts receivable clerk for Wigs Plus prepared the following partially completed aging of receivables schedule as of the end of business on December 31, 2009:
Customer Balance Not Past Due 1-30 31-60 61-90 91-120 Over 120
Alpha Beauty 20,000 20,000
Blonde Wigs 11,000 11,000
Zahn’s Beauty 2,900 2,900
Subtotals 900,000 498,600 217,250 98,750 33,300 29,950 22,150
The following accounts were unintentionally omitted from the aging schedule:
Customer Due Date Balance
Sun Coast Beauty May 30, 2009 $ 2850
Paradise Beauty Store Sept 15, 2009 6050
Helix Hair Products Oct 17, 2009 800
Hairy’s Hair Care Oct 20, 2009 2000
Surf Images Nov 18, 2009 700
Oh The Hair Nov 29, 2009 3500
Mountain Coatings Dec 1, 2009 2250
Lasting Images Jan 9, 2010 7400
Wigs Plus has a past history of uncollectible accounts by age category, as follows:
Age Class Percent 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 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 Wigs Plus has a credit balance of $1,710 before adjustment on December 31, 2009. Journalize the adjustment for uncollectible account.
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