Financial Accounting: An Integrated Statements Approach, 2nd Edition

Chapter 8 Receivables 377

Account Due Date Amount

The Body Shop June 3 $3,000

Custom Auto July 1 2,500

Hometown Repair March 22 500

Jake’s Auto Repair May 19 1,000

Like New June 18 750

Sally’s April 12 1,800

Uptown Auto May 8 500

Westside Repair & Tow May 31 1,100

Determine the number of days each account is past due.

The accounts receivable clerk for Vandalay Industries prepared the following partially com-

pleted aging-of-receivables schedule as of the end of business on November 30:

Exercise 8-4

Aging-of-receivables schedule

Goal 4

Exercise 8-5

Estimating allowance for
doubtful accounts

Goal 4

$78,290

Aaron Brothers Inc.

Abell Company

Customer Balance

2,000

1,500

Not

Past

Due

Days Past Due

1–30 31–60 61–90 Over 90

2,000

Zollo Company 5,000

872,500 540,000 180,000

5,000

Subtotals 78,500 42,300 31,700

1,500

The following accounts were unintentionally omitted from the aging schedule and not included

in the subtotals above:

Customer Balance Due Date

Tamika Industries $25,000 August 24

Ruppert Company 8,500 September 3

Welborne Inc. 35,000 October 17

Kristi Company 6,500 November 5

Simrill Company 12,000 December 3

a. Determine the number of days past due for each of the preceding accounts.

b. Complete the aging-of-receivables schedule by including the omitted accounts.

Vandalay 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 8-4.

Percentage

Age Class Uncollectible

Not past due 3%

1–30 days past due 5

31–60 days past due 15

61–90 days past due 25

Over 90 days past due 40