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 $40,000 on credit. b. On January 31, the company estimated bad debts using 1 percent of credit sales. c. On February 4, the company collected $20,000 of accounts receivable. d. On February 15, the company wrote off a $100 account receivable. e. During February, the company provided services for $30,000 on credit. f. On February 28, the company estimated bad debts using 1 percent of credit sales. g. On March 1, the company loaned $2,400 to an employee, who signed a 6% note, due in 6 months. h. On March 15, the company collected $100 on the account written off one month earlier. i. 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 $1,200. Number of Days Unpaid 31- 60 $ 0- 30 $ Customer Total 61 - 90 Over 90 $ $ Alabama Tourism 200 100 80 20 $ 1, 000 Bayside Bungalows Others (not shown to save space) Xciting Xcursions 400 400 8, 400 17, 000 6, 800 800 400 400 $ 18, 000 $ 7, 300 $ 1, 020 $ 1, 200 $ 8, 480 Total Accounts Receivable Estimated Uncollectible (%) 2% 10% 20% 40%

Can your explain what am I missing and why is that?

Answer 1

Missing point -

1) Doubtful debt allowance calculation on the basis of Ageing report

2) Interest calculation and Journal entries

3) Journal entries relates to Doubtful debt allowance

4) Note receivable - Journal Entries

	Web Wizard
	Partial balance Sheet
	at marh 31
Current Assets	Amnt($)	Amnt($)	Amnt($)
Account Receivable	18,000
Allowance for Doubtful Debt-Wn1	-1,678
Account receivable (after allowance)		16,322
Note Receivable( short term)		2,400
Interest receivable wn2		12

Journal Entries	Debit($)	Credit($)
Bad Debt Expenses	478
Allowance for doubtful debt		478
( Bad debt as calculated below)
Interest receivable	12
Interest revenue		12
( acrrued Interest Income)
Note Receivable	2,400
Cash		2,400
cash loaned to Employee

wn1
Account Receivable $-a	Estimated Uncollectable -b	Total$(a*b)
7,300	2%	146
8,480	10%	848
1,020	20%	204
1,200	40%	480
Total		1,678
Less
Unadjusted of Credit Balance		-1,200
		478
wn2
Interest receivable	($2400*6%)/12	12