Question

Tre n i uur Ownes i une questions UiSayeu veuw. Fraud Investigators Inc, operates a fraud detection service. a. On March 31, 10 customers were billed for detection services totaling $25,000. b. On October 31, a customer balance of $1,500 from a prior year was determined to be uncollectible and was written oll c. On December 15, a customer paid an old balance of $900, which had been written off in a prior year. d. On December 31, $500 of bad debts were estimated and recorded for the year. E8-9 Part 1 Required: 1. Prepare journal entries for each transaction above. (If no entry is required for a transaction/event, select "No Journal Entry Required" in the first account field.)

Answer 1

Journal entry for each transaction is shown below
Date	General Journal	Debit	Credit
31-Mar	Accounts receivable	$25,000
	Service revenue		$25,000
	(To record customers billed)
31-Oct	Allowance for doubtful accounts	$1,500
	Accounts receivable		$1,500
	(To record accounts receivable written off)
15-Dec	Accounts receivable	$900
	Allowance for doubtful accounts		$900
	(To reinstate accounts receivable recovered now)
15-Dec	Cash	$900
	Accounts receivable		$900
	(To record cash received from customer)
31-Dec	Bad debt expense	$500
	Allowance for doubtful accounts		$500
	(To record bad debt expense)
The impact of each transaction is shown below
Transaction	Net receivables	Net sales	Income from operations
a.	+25000	+25000	+25000
b.	NE	NE	NE
c.	-900	NE	NE
d.	-500	NE	-500