Question

Required information (The following information applies to the questions displayed below.) h oo The company endete. At com 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 3. During January, the company provided services for $37000 on credit. b. On January 31, the company estimated bad debts using 2 percent of credit sales c On February 4, the company collected $18,500 of accounts receivable d. On February 15, the company wrote off a $150 account receivable e During February, the company provided services for $27,000 on credit credit 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 note due in months h On March 15, the company collected $150 on the account written of one month earlier On March 31, the company accrued interest eamed on the note 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 $117 on credit Y 15, the company collected sted debts using Totale-3031-60 230 tte $ 90 $ 61-90 Overse customer Alabama Touris Bayside Bungalows others (not shown to save space) Xciting Xcursions Total Accounts Receivable Estimated Uncollectible (X) 16,600 8 , 100 1.100 6,500 390 $7,000 517,590 $8,190 51.130 1.270 2. Prepare the journal enules for items (of no entry is required for a transactiondeventSelect No Journal Ency Required in the first account field. Do not round intermediate calculations.) View transaction fist View journal entry worksheet

Answer 1

	Account title and explanation	Debit	Credit
a	Accounts receivable	$37,000
	Service revenue		$37,000
	[Services performed on account]
b	Bad debt expense [37,000 x 2%]	$740
	Allowance for doubtful accounts		$740
	[Adjusting entry for bad debts]
c	Cash	$18,500
	Accounts receivable		$18,500
	[Cash collections from customers]
d	Allowance for doubtful acconts	$150
	Accounts receivable		$150
	[Wrote-off of accounts receivables]
e	Accounts receivable	$27,000
	Service revenue		$27,000
	[Services performed on account]
f	Bad debt expense [27,000 x 2%]	$540
	Allowance for doubtful accounts		$540
	[Adjusting entry for bad debts]
g	Notes receivable	$2,600
	Cash		$2,600
	[Loaned in exchange of notes]
h	Accounts receivable	$150
	Allowance for doubtful acconts		$150
	[To reinstate previously written off]
	Cash	$150
	Accounts receivable		$150
	[Collections from customers]
i	Interest receivable	$13
	Interest revenue [2,600 x 6% x 1/12]		$13
	[Accrued interest earned]
j	Bad debt expense [1636*-1170]	$466
	Allowance for doubtful accounts		$466
	[Adjustment for Bad debt expense]

*For j,

	0-30	31-60	61-90	Over 90	Total
Accounts receivable	$7,000	$8,190	$1,130	$1,270	$17,590
% of uncollectible	3%	10%	20%	30%
Uncollectibles	$210	$819	$226	$381	$1,636

WEB WIZARD, INC.
Partial Balance Sheet
As March 31
Assets
Current assets
Accounts receivable	$17,590
(Less): Allowance for doubtful accounts	($1,636)
Accounts receivable, net of allowance		$15,954

Web Wizard would report
Bad debt expense	Before	Income from operatins
Interest revenue	After	Income from operatins