Web Wizard, Incorporated, has provided information technology services for several years. For the first two months of thecurrent year, the company has used the percentage of credit sales method to estimate bad debts. At the end of the firstquarter, the company switched to the aging of accounts receivable method. The company entered into the followingpartial list of transactions during the first quarter.a. During January, the company provided services for $45,000 on credit.b. On January 31, the company estimated bad debts using 2 percent of credit sales.c. On February 4, the company collected $22,500 of accounts receivable.d. On February 15, the company wrote off $200 account receivable.e. During February, the company provided services for $35,000 on credit.On February 28, the company estimated bad debts using 2 percent of credit sales..g. On March 1, the company loaned $2,000 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.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 includesthe preceding transactions (as well as others not listed). Prior to the adjustment, Allowance for Doubtful Accounts hasan unadjusted credit balance of $1,250.Number of Days UnpaidCustomerAlabama TourismTotal$ 200to 30$ 120Bayside BungalowsOthers (not shown to save space)Xciting Xcursions45018,100380Total Accounts Receivable$19,1307,300388$ 7,80031 to 60$ 708,90061 to 90Over 90$ 101,200$ 450780$ 8,970Estimated Uncollectible (%)3%10%$1,21020%$1,15040%Required:1. For items (a) to (), analyze the transaction to determine effects on specific financial statement accounts and the overall accountingequation. (Enter any decreases to Assets, Liabilities, or Stockholders Equity with a minus sign. Do not round intermediatecalculations.)

Every transaction has a double impact on the books of accounts according to the dual concept of…

Answered: Required: 1. For items (a) to ( analyze…

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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Required: 1. For items (a) to ( 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.)