Receivables, Bad Debt Expense, and Interest Revenue C. d. On February 4, the company collected $20,000 of accounts receivable. On February 15, the company wrote off $100 of accounts 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. 8. On March 1, the company loaned $2,400 to an employee, who signed a 6 percent note, due in six months. h. On March 15, the company collected $100 on the account written off one month earlier. On March 31, the company accrued interest earned on the note. i. 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 or badjustment, Allowance for Doubtful Accounts had an unadjusted credit balance of $1,200. Customer Alabama Tourism Ravido Bungalows $ Total 0-30 $100 2001 ($ 400 Number of Days Unpaid 31-60 61-90 $ 800 $ 20 Over 90 $ 400
Receivables, Bad Debt Expense, and Interest Revenue C. d. On February 4, the company collected $20,000 of accounts receivable. On February 15, the company wrote off $100 of accounts 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. 8. On March 1, the company loaned $2,400 to an employee, who signed a 6 percent note, due in six months. h. On March 15, the company collected $100 on the account written off one month earlier. On March 31, the company accrued interest earned on the note. i. 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 or badjustment, Allowance for Doubtful Accounts had an unadjusted credit balance of $1,200. Customer Alabama Tourism Ravido Bungalows $ Total 0-30 $100 2001 ($ 400 Number of Days Unpaid 31-60 61-90 $ 800 $ 20 Over 90 $ 400
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:384
CHAPTER 8 Receivables, Bad Debt Expense, and Interest Revenue
C.
d.
e.
f.
g.
h.
i.
j.
On March 15, the company collected $100 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, which includes the preceding transactions (as well as others not listed). Prior to the
67 badjustment, Allowance for Doubtful Accounts had an unadjusted credit balance of $1,200.
On February 4, the company collected $20,000 of accounts receivable.
On February 15, the company wrote off $100 of accounts receivable.
During February, the company provided services for $30,000 on credit.
On February 28, the company estimated bad debts using 1 percent of credit sales.
On March 1, the company loaned $2,400 to an employee, who signed a 6 percent note, due in
six months.
2.
3.
Customer
Alabama Tourism
Bayside Bungalows
Others (not shown to save space)
Xciting Xcursions
Total Accounts Receivable
Estimated Uncollectible (%)
4.
Total
$ 200
400
17,000
A A
400
$18,000
0-30
$ 100
era
6,800
400
$7,300
2%
Number of Days Unpaid
31-60
61-90
PL
Over 90
$ 80 $ 20 fundou
$ 400
800
8,400
boxing
$8,480
10%
1,000
Required:
1.
For items (a)-(j), analyze the amount and direction (+ or -) of effects on specific financial
statement accounts and the overall accounting equation.
Prepare journal entries for items (a)-(j).
$1,020
20%
$1,200
40%
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 first quarter.
Sales Revenue and Service Revenue are two income statement accounts that relate to Accounts
Receivable. Name two other accounts related to Accounts Receivable and Notes Receivable
that would be reported on the income statement and indicate whether each would appear
but before, or after, Income from Operations.
16 251 In
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diavo siliogos no grutin (0)
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Transcribed Image Text:PAS-4 Accounting for Accounts and Notes Receivable Transactions
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.
b.
During January, the company provided services for $40,000 on credit.
On January 31, the company estimated bad debts using 1 percent of credit sales.
bro
LO 8-2, 8-3
LEVEL
UP
Expert Solution
Step 1
Solution :
Bad debt expense = Required balance in allowance account - Existing credit balance in allowance account
Net accounts receivables is computed as Gross receivables less balance of allowance for doubtful accounts
Bad debt expense in considered as operating expense, therefore comes before income from operations
Interest revenue is considered as non operating income therefore comes after income from operations.
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