Averys All Natural Company supplies wigs and hair care

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Averys All-Natural Company supplies wigs and hair care products to beauty salons throughout
Texas and the Southwest. The accounts receivable clerk for Averys All- Natural prepared the
following aging-of-receivables schedule as of the end of business on December 31,
20Y7:Averys All-Natural Company has a past history of uncollectible accounts by age category,
as follows:Age Class _________________Percent UncollectibleNot past due
..................................... 1%1-30 days past due ................................ 331-60 days past due
.............................. 761-90 days past due ............................. 1691-120 days past due
........................... 40Over 120 days past due ........................ 901. Estimate the allowance for
doubtful accounts, based on the aging-of-receivables schedule.2. Assume that the allowance
for doubtful accounts for Averys All-Natural Company has a negative balance of $(2,250) before
adjustment on December 31, 20Y7. Illustrate the effect on the accounts and financial
statements of the adjustment for uncollectible accounts.3. Averys All-Natural Company reported
credit sales of $2,400,000 during 20Y7. Assume that instead of using the analysis of
receivables method of estimating uncollectible accounts, Natural Hair Company uses the
percent of sales method and estimates that 2.5% of sales will be uncollectible. Illustrate the
effect on the accounts and financial statements of the adjustment for uncollectible accounts
using the percent of sales method.4. Assume that on March 4, 20Y8, Averys All-Natural wrote
off the $2,950 account of Superior Images as uncollectible. Illustrate the effect on the accounts
and financial statements of the write-off of the Superior Images account.5. Assume that on
August 17, 20Y8, Superior Images paid $2,950 on its account. Illustrate the effect on the
accounts and financial statements of reinstating and collecting the Superior Images account.6.
Assume that instead of using the allowance method, Averys All-Natural uses the direct write-off
method. Illustrate the effect on the accounts and financial statements of the following:a. The
write-off of the Superior Images account on March 4, 20Y8.b. The reinstatement and collection
of the Superior Images account on August 17, 20Y8.View Solution:
Averys All Natural Company supplies wigs and hair care products to

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