Question

On January 1, 2021, the general ledger of 3D Family Fireworks includes the following account balances: Credit Debit $ 26,100 14,700 $ 3,000 Accounts Cash Accounts Receivable Allowance for Uncollectible Accounts Supplies Notes Receivable (6%, due in 2 years) Land Accounts Payable Common Stock Retained Earnings Totals 3,600 15,000 80,000 7,900 95,000 33,500 $139,400 $139,400 During January 2021, the following transactions occur: January 2 Provide services to customers for cash, $46,100. January 6 Provide services to customers on account, $83,400. January 15 Write off accounts receivable as uncollectible, $2,500. January 20 Pay cash for salaries, $32,500. 22 Receive cash on accounts receivable, $81,000. January 25 Pay cash on accounts payable, $6,600. January 30 Pay cash for utilities during January, $14,800. The following information is available on January 31, 2021. a. The company estimates future uncollectible accounts. The company determines $4,000 of accounts receivable on January 31 are past due, and 20% of these accounts are estimated to be uncollectible. The remaining accounts receivable on January 31 are not past due, and 5% of these accounts are estimated to be uncollectible. (Hint: Use the January 31 accounts receivable balance calculated in the general ledger.) b. Supplies at the end of January total $800. C. Accrued interest revenue on notes receivable for January. Interest is expected to be received each December 31. d. Unpaid salaries at the end of January are $34,600.

Answer 1

Accounts Receivable as on Jan 1 = $14700+83400-2500-81000 = $14600
Allowance for Doubtful accounts unadjusted = $3000-2500 = $500
Allowance for Doubtful accounts Adjusted = 4000 x 20% + (14600-4000)x5% = $1330

	Account Titles	Debit	Credit
8	Bad Debt Expense	$                830		=1330-500
	Allowance for Doubtful Debts		$                    830
9	Supplies Expense	$            2,800		=3600-800
	Supplies		$                2,800
10	Interest Receivable	$                  75		=15000*6%*1/12
	Interest Revenue		$                      75
11	Salaries Expense	$          34,600
	Salaries Payable		$              34,600
12	Service Revenue	$       129,500
	Interest Revenue	$                  75
	Retained Earnings		$           129,575
13	Retained Earnings	$          85,000
	Salaries Expense		$              67,100
	Utilities Expense		$              14,800
	Bad Debt Expense		$                    300
	Supplies Expense		$                2,800