Question

The following information applies to the questions displayed below.) Web Wizard, Inc., has provided information technology services for several years. For the first two months of the current year, the company has used the percentage of credit sales method to estimate bad debts. At the end of the first quarter, the company switched to the aging of accounts receivable method. The company entered into the following partial list of transactions during the first quarter a. During January, the company provided services for $41,000 on credit. b. On January 31, the company estimated bad debts using 2 percent of credit sales. c. On February 4, the company collected $20,500 of accounts receivable. d. On February 15, the company wrote off a $150 account receivable. e. During February, the company provided services for $31,000 on credit. f On February 28, the company estimated bad debts using 2 percent of credit sales. oaned $2.600 to an employee, who signed a 6% note, due in 6 months h. On March 15, the company collected $150 on the account written off one month earlier On March 31, the company accrued interest earned on the note. J. On March 31, the company adjusted for uncollectible accounts, based on an aging analysis (below). Allowance for Doubtful Accounts has an unadjusted credit balance of $1,210. 5 0-30 110 Customer Alabama Tourism Bayside Bungalows Others (not shown to save space) Xciting xcursions Total Accounts Receivable Estimated Uncollectible (8) Total $ 230 410 17,400 390 $18,430 Number of Days Unpaid 31-60 61-90 Over 90 5 905 30 $ 410 3,500 1,100 6,900 390 57,400 51,310 53,590 10% $ 1,130 20%

Answer 1

Solution:

Web Wizard would report:
Bad debts expense	before	Income from operations
Interest revenue	after	Income from operations