Question

nity dale. LO 8-2,8 PB8-4 Accountin LEVEL Elite Events Corporatio the percentage of credi At the end of each a method. The compa ccounting for Account aceivable Transactions Corporation has prowicet alleining services for several years. The company uses e of credit sales me borito escins bad debts for internal monthly reporting purposes. of each quarter, the company posts its records using the aging of accounts receivable The company entered into the towing partial list of transactions during the first quarter. January, the company provided services for $300,000 on credit. nuary 31, the company estimated bad debts using 1 percent of credit sales. February 4, the company collected $250,000 of accounts receivable. February 15, the company wrote off a $3,000 account receivable. During February, the company provided services for $250,000 on credit. On February 28, the company estimated bad debts using 1 percent of credit sales. On March 1, the company loaned $15,000 to an employee who signed a 4% note, due in 9 months. On March 15, the company collected $3,000 on the account written off one month earlier. On March 31, the company accrued interest earned on the note. On March 31, the company adjusted for uncollectible accounts, based on the following aging analysis. Allowance for Doubtful Accounts has an unadjusted credit balance of $9.000. Customer Over 90 0-30 $ 1,000 Number of Days Unpaid 31-60 61-90 $1,000 $ 1,000 42,000 9.000 Total $ 2,000 2,000 99,000 7,000 $110,000 $ Aerosmith Biggie Small Others (not shown to save space) ZZ Top Total Accounts Receivable Estimated uncollectible (%) 1,000 9,000 39,000 7,000 $47,000 5% $43,000 10% $10,000 20% $10,000 40% Required: 1. For items (a)-(), analyze the amount and direction (+ or --) of effects on specific financial statement accounts and the overall accounting equation. - Prepare journal entries for items (a)-0). Show how Accounts Receivable, Notes Receivable, and their related accounts would be reported in the current assets section of a classified balance sheet. ales Revenue and Service Revenue are two income statement accounts that relate to Accounts ceivable, Name two other accounts related to Accounts Receivable and Notes Receivable would be reported on the income statement and indicate whether each would appear before, or after, Income from Operations.

Answer 1

a) Accounts receivable A/c Dr 300000

To Revenue  A/c Cr 300000

b) Bad Debts A/c Dr 3000

To Provision for Bad Debts A/c Cr 3000

c) Cash/Bank A/c Dr 250000

To Accounts Receivables A/c Cr 250000

d) Provision for Bad Debts A/c Dr 3000

To Accounts Receivables A/c Cr 3000

e) Accounts receivable A/c Dr 250000

To Revenue  A/c Cr 250000

f) Bad Debts A/c Dr 2500

To Provision for Bad Debts A/c Cr 2500

g) Loans to Employees A/c Dr 15000

To Cash/Bank Cr 15000

h) Accounts Receivable A/c Dr 3000

To Bad Debts A/c Cr 3000

Cash A/c Dr 3000

To Accounts Receivables a/c Cr 3000

i) Loans to Employees A/c Dr 50

To Interest Income A/c 50

(15000 loan* 4% = 600/12= 500

j) Doubtful Accounts A/c Dr 12650

To Accounts Receivables Cr 12650