Required information [The following information applies to the questions displayed below.] 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 $46,000 on credit. b. On January 31, the company estimated bad debts using 1 percent of credit sales. c. On February 4, the company collected $23,000 of accounts receivable. d. On February 15, the company wrote off $100 account receivable. e. During February, the company provided services for $36,000 on credit. f. On February 28, the company estimated bad debts using 1 percent of credit sales. g. On March 1, the company loaned $2,400 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. 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 $1,260. Number of Days Unpaid Customer Total 0 to 30 31 to 60 61 to 90 Over 90 Alabama Tourism $ 200 $ 100 $ 80 $ 20 $ 460 Bayside Bungalows Others (not shown to save space) Xciting Xcursions 460 18,200 7,400 9,000 1,000 800 400 400 Total Accounts Receivable $ 19,260 $ 7,900 $ 9,080 $ 1,020 $ 1,260 Estimated Uncollectible (%) 2% 15% 20% 40%
Required information [The following information applies to the questions displayed below.] 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 $46,000 on credit. b. On January 31, the company estimated bad debts using 1 percent of credit sales. c. On February 4, the company collected $23,000 of accounts receivable. d. On February 15, the company wrote off $100 account receivable. e. During February, the company provided services for $36,000 on credit. f. On February 28, the company estimated bad debts using 1 percent of credit sales. g. On March 1, the company loaned $2,400 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. 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 $1,260. Number of Days Unpaid Customer Total 0 to 30 31 to 60 61 to 90 Over 90 Alabama Tourism $ 200 $ 100 $ 80 $ 20 $ 460 Bayside Bungalows Others (not shown to save space) Xciting Xcursions 460 18,200 7,400 9,000 1,000 800 400 400 Total Accounts Receivable $ 19,260 $ 7,900 $ 9,080 $ 1,020 $ 1,260 Estimated Uncollectible (%) 2% 15% 20% 40%
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:**Required Information**
*The following information applies to the questions displayed below.*
Web Wizard, Incorporated, has provided information technology services for several years. For the first two months of the current year, the company 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 $46,000 on credit.
b. On January 31, the company estimated bad debts using 1 percent of credit sales.
c. On February 4, the company collected $23,000 of accounts receivable.
d. On February 15, the company wrote off $100 account receivable.
e. During February, the company provided services for $36,000 on credit.
f. On February 28, the company estimated bad debts using 1 percent of credit sales.
g. On March 1, the company loaned $2,400 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.
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 $1,260.
**Aging Analysis Table Explanation**
| **Customer** | **Total** | **Number of Days Unpaid** |
| | | **0 to 30** | **31 to 60** | **61 to 90** | **Over 90** |
| ----------------------------|-----------|--------------|--------------|--------------|------------|
| Alabama Tourism | $200 | $100 | $80 | $20 | |
| Bayside Bungalows | $460 | | | | $460 |
| Others (not shown to save space)| $18,200 | $7,400 | $9,000 | $1,000 | $800
Transcribed Image Text:**Question:**
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 before, or after, Income from Operations.
**Table:**
| Web Wizard would report | | |
|-------------------------|--------------------------|--------------------------------|
| | | Income from Operations. |
| | | Income from Operations. |
(Note: The table is incomplete as the accounts related to Accounts Receivable and Notes Receivable are not specified. It only indicates that both would be reported under "Income from Operations.")
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