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Thanks

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Solution

1 Customer Due Date Number of Days Past Due Adams Sports & Flies May 22, 2015 223 days (9 + 30 + 31 + 31 + 30 + 31 + 30 + 31) Blue Dun Flies Oct. 10, 2015 82 days (21 + 30 + 31) Cicada Fish Co. Sept. 29, 2015 93 days (1 + 31 + 30 + 31) Deschutes Sports Oct. 20, 2015 72 days (11 + 30 + 31) Green River Sports Nov. 7, 2015 54 days (23 + 31) Smith River Co. Nov. 28, 2015 33 days (2 + 31) Western Trout Company Dec. 7, 2015 24 days Wolfe Sports Jan. 20, 2016 Not past due 2 & 3 Aging of Receivables Schedule December 31, 2015 Not Days Past Due Past Due Customer Balance Over 1–30 31–60 61–90 91–120 120 AAA Outfitters 20,000 20,000 Brown Trout Fly Shop 7,500 7,500 Zigs Fish Adventures 4,000 4,000 Subtotals 1,300,000 750,000 290,000 120,000 40,000 20,000 80,000 Adams Sports & Flies 5,000 5,000 Blue Dun Flies 4,900 4,900 Cicada Fish Co. 8,400 8,400 Deschutes Sports 7,000 7,000 Green River Sports 3,500 3,500 Smith River Co. 2,400 2,400 Western Trout Company 6,800 6,800 Wolfe Sports 4,400 4,400 Totals 1,342,400 754,400 296,800 125,900 51,900 28,400 85,000 Percentage uncollectible 1% 2% 10% 30% 40% 80% Estimate of uncollectible accounts 121,000 7,544 5,936 12,590 15,570 11,360 68,000 4 Bad Debt Expense 124,600 Allowance for Doubtful Accounts 124,600 Uncollectible accounts estimate ($121,000 + $3,600). 5 On the balance sheet, assets would be overstated by $124,600, since the allowance for doubtful accounts would be understated by $124,600. In addition, the owner’s capital account would be overstated by $124,600, since bad debt expense would be understated and net income overstated by $124,600 on the income statement.