Question

Need help with General Journal.

Required Information [The following information applies to the questions displayed below.) 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. During January, the company provided services for $41,000 on credit. b. On January 31, the company estimated bad debts using 2 percent of credit sales. c. On February 4, the company collected $20,500 of accounts receivable. d. On February 15, the company wrote off a $150 account receivable. e. During February, the company provided services for $31,000 on credit. 1. 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. 1. On March 31, the company accrued interest earned on the note. J. On March 31, the company adjusted for uncollectible accounts, based on an aging analysis (below). Allowance for Doubtful Accounts has an unadjusted credit balance of $1,210. Customer Alabama Tourism Bayside Bungalows Others (not shown to save space) Xciting Xcursions Total Accounts Receivable Estimated Uncollectible (8) Total $ 230 410 17,400 390 $18,430 Number of Days Unpaid 0-30 3 1-60 61-90 Over 90 $ 110 $ 90 $ 30 $ 410 6,900 8,500 1,100 900 390 $ 7,400 $8,590 $1,130 $1,310 3% 10% 208 308

Answer 1

Solution

N P S Joumal Entries Particulars Debit Credit Event $41,000 Accounts receivables Dr 1 5 $41,000 6 To Service revenue (To record services provided on credit) 7 8 Bad debts Expense Dr $820 2 9 $820 To Allowance for doubtful accounts 10 (To record bad debts expense) 11 12 $20,500 Cash Dr 3 13 $20,500 14 To Accounts receivables 15 (To record collection of receivables) 16 Allowance for doubtful accounts Dr $150 17 4 $150 18 To Accounts receivables 19 (To write off receivables) 20 $31,000 Accounts receivables Dr 21 $31,000 22 To Service revenue (To record services provided on credit) 23 24 $620 Bad debts Expense Dr 6 25 $620 To Allowance for doubtful accounts 26 (To record bad debts expense) 27 28 $2,600 7 Notes receivables Dr 29 $2,600 30 To Cash (Loan given to employee against note) 31 32 $150 Accounts receivables Dr 33 $150 To Allowance for doubtful accounts 34 35 (To reinstate debtor account) 36 $150 Cash Dr 9 37 $150 38 To Accounts receivables (To record collection from customer previously 39 written off) 40 $13 10 Interest receivables Dr 41 $13 To Interest revenue ($2,600*6%*1/12) 42 (To record interest revenue) 43 44 $490 Bad debts Expens e Dr ($1700-$1210) 45 $490 46 To Allowance for doubtful accounts (To record bad debts expense) 47 48 49 Sheet202 (6) Sheet299 (5) et793 Sheet794 Sheet755 II

U V X Z 1 2 Computation of allowance for estimat ed uncollectibles - Web Wizard Inc. Over 90 4. 0-30 days 31-60 days 61-90 days Balance austomer days $1,310 Total Receivables Percentage uncollectibles Allowance for doubtful accounts $8,590 $18,430 $7,400 $1,130 5 10% 30% 20% 6 3% $393 $1,700 $222 $859 $226 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31 32 33 34 35 36 37 38 39 40 41 42 43 44. 45 46 47 48 49 50 51 52 53 54 et 793 Sheet299 (5) Sheet202 (6) Sheet794 Sheet755 II