Complete the aging-of-receivables schedule

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Reference no: EM13900557

Miller Wigs Company supplies wigs and hair care products to beauty salons throughout California and the Pacific Northwest. The accounts receivable clerk for Miller Wigs prepared the following partially completed aging-of-receivables schedule as of the end of business on December 31, 2007:

Customer	Balance	Not Past Due	Days Past Due
Customer	Balance	Not Past 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
Houseal Uniquely Yours	July 1, 2007	$ 900
Country Designs	Aug. 2, 2007	4,000
Treat's	Sept. 9, 2007	1,200
Molina's Beauty Store	Sept. 29, 2007	1,100
Ginburg Supreme	Oct. 10, 2007	1,500
Steve's Hair Products	Oct. 17, 2007	600
Hairy's Hair Care	Oct. 31, 2007	2,000
VanDiver's Images	Nov. 18, 2007	700
Lopez Hair Styling	Nov. 28, 2007	1,800
Josset Ritz	Nov. 30, 2007	3,500
Cool Designs	Dec. 1, 2007	1,000
Buttram Images	Jan. 3, 2008	6,200

Miller Wigs has a past history of uncollectible accounts by age category, as follows:

Age Class	Percentage 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 Miller Wigs has a credit balance of $11,350 before adjustment on December 31, 2007. Illustrate the effect on the accounts and financial statements of the adjustment for uncollectible accounts.

Reference no: EM13900557

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