Question

The following formation 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 $42,000 on credit. b. On January 31, the company estimated bad debts using 1 percent of credit sales. c. On February 4, the company collected $21,000 of accounts receivable. d On February 15, the company wrote off a $200 account receivable. e During February, the company provided services for $32,000 on credit. f. On February 28, the company estimated bad debts using 1 percent of credit sales. g. On March 1, the company loaned $2,800 to an employee, who signed a 6% note, due in 6 months. h. On March 15, the company collected $200 on the account written off one month earlier. 1. 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 $1,220. 0-30 $ 120 Customer Alabama Tourism Bayside Bungalows Others (not shown to save space) Xciting Xcursions Total Accounts Receivable Estimated Uncollectible (%) Total $ 200 420 17,500 380 $18,500 Number of Days Unpaid 31-60 61-90 Over 90 $ 70 $ 10 $ 420 8,600 1,200 780 7,000 380 $ 7,500 2% $ 8,670 10% $1,210 20% $ 1,120 35% 3. Show how Accounts Receivable, Notes Receivable, and their related accounts would be reported in the current assets section of a classified balance sheet at the end of the quarter on March 31. (Do not round intermediate calculations.) Answer is complete but not entirely correct. WEB WIZARD, INC. Partial Balance Sheet At March 31 Assets Current Assets Accounts Receivable $ 18.500 ool (1,651) $ Allowance for Doubtful Accounts Accounts Receivable, Net of Allowance Notes Receivable (short-term) Interest Receivable Cash ✓ 16.849 2,800 14 18,400 ® OOO ✓ х

Answer 1

Answer

--requirement 3.

ASSETS
Current Assets:
Accounts receivables	$18,500
Allowance for Doubtful accounts	($1,651)
Account receivables, net of allowance		$16,849
Notes receivables (Short term)		$2,800
Interest receivables		$14
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