The accounts receivable clerk for Thunderwood Industries prepared the following partially completed aging of

The accounts receivable clerk for Thunderwood Industries prepared the following partially completed aging of receivables schedule as of the end of business on August 31:


Not
Due
Past
90
Over
Customer Balance
Days Past Due
Allied Industries Inc.
Archer Company
Zussman Company
Subtotals
 3,000
4,500
5,000
750,000 7,000
5,000
75,000
3,000
480,000
4,500
160,000 28,000


The following accounts were unintentionally omitted from the aging schedule and not included in the subtotals above:



Customer Balance Due Date
Color World Industries $33,000 March 13
Hawks Company 15,000 June 29
Osler Inc. 21,000 July 8
Sather Sales Company 8,000 September 6
Wisdom Company 6,500 August 25







a. Determine the number of days past due for each of the preceding accounts as of August 31.
b. Complete the aging of receivables schedule by adding the omitted accounts to the bottom of the schedule and updating the totals.


Answer:

a. Customer Due Date Number of Days Past Due
Color World Industries March 13 171 days (18 + 30 + 31 + 30 + 31 + 31)
Hawks Company June 29 63 days (1 + 31 + 31)
Osler Inc. July 8 54 days (23 + 31)
Sather Sales Company September 6 Not past due
Wisdom Company August 25 6 days (31 – 25)


b. Aging of Receivables Schedule
August 31
Customer Balance
Not Past
Due
Days Past Due
1–30 31–60 61–90
Over
90
Allied Industries Inc. 3,000 3,000
Archer Company 4,500 4,500
Zussman Company 5,000 5,000
Subtotals 750,000 480,000 160,000 75,000 28,000 7,000
Color World Industries 33,000 33,000
Hawks Company 15,000 15,000
Osler Inc. 21,000 21,000
Sather Sales Company 8,000 8,000
Wisdom Company 6,500 6,500
Totals 833,500 488,000 166,500 96,000 43,000 40,000



Thunderwood Industries has a past history of uncollectible accounts, as shown below. Estimate the allowance for doubtful accounts, based on the aging of receivables schedule you completed in Exercise 9-8.


Age Class
Percent
Uncollectible
Not past due 2%
1–30 days past due 6
31–60 days past due 12
61–90 days past due 30
Over 90 days past due 75


Answer:


Balance
Not Past
Due
Days Past Due
1–30 31–60 61–90
Over
90
Total receivables 833,500 488,000 166,500 96,000 43,000 40,000
Percentage uncollectible 2% 6% 12% 30% 75%
Allowance for doubtful
accounts 74,170 9,760 9,990 11,520 12,900 30,000