two months web wizard, Incorporated, has provided information technology service for several years. For 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 $31,000 on credit. b. On January 31, the company estimated bad debts using 2 percent of credit sales. c. On February 4, the company collected $15,500 of accounts receivable. d. On February 15, the company wrote off $150 account receivable. e. During February, the company provided services for $21,000 on credit. f. On February 28, the company estimated bad debts using 2 percent of credit sales. g. On March 1, the company loaned $2,600 to an employee, who signed a 6% note, due in 6 months. h. On March 15, the company collected $150 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 the following aging analysis, which includes the preceding transactions (as well as others not listed). Prior to the adjustment, Allowance for Doubtful Accounts has an unadjusted credit balance of $1,110.
two months web wizard, Incorporated, has provided information technology service for several years. For 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 $31,000 on credit. b. On January 31, the company estimated bad debts using 2 percent of credit sales. c. On February 4, the company collected $15,500 of accounts receivable. d. On February 15, the company wrote off $150 account receivable. e. During February, the company provided services for $21,000 on credit. f. On February 28, the company estimated bad debts using 2 percent of credit sales. g. On March 1, the company loaned $2,600 to an employee, who signed a 6% note, due in 6 months. h. On March 15, the company collected $150 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 the following aging analysis, which includes the preceding transactions (as well as others not listed). Prior to the adjustment, Allowance for Doubtful Accounts has an unadjusted credit balance of $1,110.
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
Related questions
Concept explainers
Bad Debts
At the end of the accounting period, a financial statement is prepared by every company, then at that time while preparing the financial statement, the company determines among its total receivable amount how much portion of receivables is collected by the company during that accounting period.
Accounts Receivable
The word “account receivable” means the payment is yet to be made for the work that is already done. Generally, each and every business sells its goods and services either in cash or in credit. So, when the goods are sold on credit account receivable arise which means the company is going to get the payment from its customer to whom the goods are sold on credit. Usually, the credit period may be for a very short period of time and in some rare cases it takes a year.
Question
Transcribed Image Text:Web Wizard, Incorporated, 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 $31,000 on credit.
b. On January 31, the company estimated bad debts using 2 percent of credit sales.
c. On February 4, the company collected $15,500 of accounts receivable.
d. On February 15, the company wrote off $150 account receivable.
e. During February, the company provided services for $21,000 on credit.
f. On February 28, the company estimated bad debts using 2 percent of credit sales.
g. On March 1, the company loaned $2,600 to an employee, who signed a 6% note, due in 6 months.
h. On March 15, the company collected $150 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 the following aging analysis, which includes
the preceding transactions (as well as others not listed). Prior to the adjustment, Allowance for Doubtful Accounts has
an unadjusted credit balance of $1,110.
Number of Days Unpaid
Customer
Alabama Tourism
Bayside Bungalows
Others (not shown to save space)
Xciting Xcursions
Total
$ 230
310
15,400
390
0 to 30
$ 110
31 to 60 61 to 90
Over 90
$ 90
Total Accounts Receivable
$ 16,330
5,900
390
$ 6,400
7,500
$ 30
1,100
$ 310
900
$ 7,590
$ 1,130
Estimated Uncollectible (%)
3%
10%
20%
$ 1,210
30%
Required:
1. For items (a) to (j), analyze the transaction to determine effects on specific financial statement accounts and the overall accounting
equation. (Enter any decreases to Assets, Liabilities, or Stockholders Equity with a minus sign. Do not round intermediate
calculations.)
ن ن ن ف نه
d.
e.
Assets
=
=
=
=
Liabilities
Stockholders' Equity
+
+
+
+
+
+
+
f.
=
+
g.
=
+
g.
+
h.
=
h.
+
h.
=
+
h.
+
i.
=
+
j.
=
+
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