Question

Required Information PA8-4 Accounting for Accounts and Notes Receivable Transactions (LO 8-2, LO 8-3] 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 $38,000 on credit the company estimated bad debts using 1 percent of credit sales c. On February 4, the company collected $19,000 of accounts recelvable. d. On February 15, the company wrote off a $100 account receivable. e. During February, the company provided services for $28,000 on credit. On February 28, the company estimated bad debts using 1 percent of credit sales. 9. 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. L. On March 31, the company accrued Interest earned on the note. 1. 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 $1,180. alle Customer Alabama Tourism Bayside Bungalows Others (not shown to save space) Xeiting Xeursions Total Accounts Receivable Tatimated Uncollectible (9) Total $ 200 380 16,600 400 $17,580 Number of Days Unpaid 030 31 60 6190 Over 90 $ 100 80 $ 20 $380 6,600 8,200 1,000 000 000 400 87,100 $8,280 $1,020 $1,180 26 158 409 5 200

Answer 1

Solution 1:

Computation of allowance for estimated uncollectibles - Web Wizard
Customer	Balance	0-30 days	31-60 days	61-90 days	Over 90 days
Total Receivables	$17,580.00	$7,100.00	$8,280.00	$1,020.00	$1,180.00
Percentage uncollectibles		2%	15%	20%	40%
Allowance for doubtful accounts	$2,060.00	$142.00	$1,242.00	$204.00	$472.00

Event	Assets		=	Liabilities		+	Stockholder's Equity
a	Accounts receivables	$38,000.00					Service revenue	$38,000.00
b	Allowance for doubtful accounts	-$380.00					Bad debts expense	-$380.00
c	Cash	$19,000.00
	Accounts receivables	-$19,000.00
d	Allowance for doubtful accounts	$100.00
	Accounts receivables	-$100.00
e	Accounts receivables	$28,000.00					Service revenue	$28,000.00
f	Allowance for doubtful accounts	-$280.00					Bad debts expense	-$280.00
g	Note receivables	$2,400.00
	Cash	-$2,400.00
h	Accounts receivables	$100.00
	Allowance for doubtful accounts	-$100.00
	Cash	$100.00
	Accounts receivables	-$100.00
i	Interest receivables	$12.00					Interest revenue	$12.00
J	Allowance for doubtful accounts	-$880.00					Bad debts expense	-$880.00