Aging of Receivables; Estimating Allowance for Doubtful Accounts

Trophy Fish Company supplies flies and fishing gear products 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, 20Y7:

			Not		Days Past Due
			Past
Customer	Balance		Due		1-30		31-60		61-90		91-120		Over 120
AAA Outfitters	19,100		19,100
Brown Trout Fly Shop	7,800						7,800
Zigs Fish Adventures	4,500				4,500
Subtotals	1,288,200		743,400		285,000		112,400		43,300		24,700		79,400

The following accounts were unintentionally omitted from the aging schedule:

Customer	Due Date		Balance
Adams Sports and Flies		May 22	$5,400
Blue Dun Flies		Oct. 10	4,600
Cicada Fish Co.		Sept. 29	8,000
Deschutes Sports		Oct. 20	7,400
Green River Sports		Nov. 7	3,900
Smith River Co.		Nov. 28	2,700
Western Trout Company		Dec. 7	6,900
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	9
61-90 days past due	32
91-120 days past due	41
Over 120 days past due	76

Required:

1. Determine the number of days past due for each of the preceding accounts. If an account is not past due, enter a zero.

Customer	Due Date	Number of Days Past Due
Adams Sports and Flies	May 22	days
Blue Dun Flies	Oct. 10	days
Cicada Fish Co.	Sept. 29	days
Deschutes Sports	Oct. 20	days
Green River Sports	Nov. 7	days
Smith River Co.	Nov. 28	days
Western Trout Company	Dec. 7	days
Wolfe Sports	Jan. 20	days

2. Complete the aging of receivables schedule by adding the omitted accounts to the bottom of the schedule and updating the totals. If an amount box does not require an entry, leave it blank.

Trophy Fish Company
Aging of Receivables Schedule
December 31, 20Y7
Customer	Balance	Not Past Due	Days Past Due 1-30	Days Past Due 31-60	Days Past Due 61-90	Days Past Due 91-120	Days Past Due Over 120
AAA Outfitters	19,100	19,100
Brown Trout Fly Shop	7,800			7,800
Zigs Fish Adventures	4500		4500
Subtotals	1,288,200	743,400	285,000	112,400	43,300	24,700	79,400
Adams Sports and Flies
Blue Dun Flies
Cicada Fish Co.
Deschutes Sports
Green River Sports
Smith River Co.
Western Trout Company
Wolfe Sports
Totals
Percent uncollectible (%)		%	%	%	%	%	%
Estimate of uncollectible accounts	$	$	$	$	$	$	$

3. Estimate the allowance for doubtful accounts, based on the aging of receivables schedule.

$

4. Assume that the allowance for doubtful accounts for Trophy Fish has a credit balance of $3,100 before adjustment on December 31, 20Y7. Journalize the adjustment for uncollectible accounts.

Dec. 31

5. Assume that the adjusting entry in (4) was inadvertently omitted, how would the omission affect the balance sheet and income statement?

On the balance sheet, assets would be

by $ because the allowance for doubtful accounts would be

by $. In addition, the stockholders equity (retained earnings) would be

by $ because bad debt expense would be

and net income

by $ on the income statement.