Chapter 8, Problem 9E

Recording and Determining the Effects of Write-Off s. Recoveries, and Bad Debt Expense Estimates on the Balance Sheet and Income Statement

Fraud Investigators Inc. operates a fraud detection service.

Required:

1. 1. Prepare journal entries for each transaction below.
   1. a. On March 31, 10 customers were billed for detection services totaling $25,000.
   2. b. On October 31, a customer balance of $1,500 from a prior year was determined to be uncollectible and was written off.
   3. c. On December 15, a customer paid an old balance of $900, which had been written off in a prior year.
   4. d. On December 31, $500 of bad debts were estimated and recorded for the year.
2. 2. Complete the following table, indicating the amount and effect (+ for increase, − for decrease, and NE for no effect) of each transaction.