The following information applies to the questions displayed

/The following information applies to the questions displayed below/ Web Wizard, Inc. has provided informadon technology services for several years. The company uses the percentage of credit sales method to estimate bad debts for internal monthly reporting purposes. At the end of each quarter, the company adjusts its records using the aging of accounts receivable method. The company entered into the following partial list of transactions during the first quarter a. Duning Januery, the company provided services for $41,000 on credit b On January 31, the company estimated bod debts using 2 percent of credit sales. c. On February 4, the compeny collected $20,500 of accounts recelvable. d. On February 15, the company wrote off a $150 account receivable e During February, the company provided services for $31.000 on t On February 28, the company estimated bad debts using 2 percent of credit sales. g On March 1, the company loaned S2 600 to an employee who signed a 6% note, due in 6 months h. On March 15, the company collected $150 on the account wnitten off one month earlier t 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 Number of Days Unpaid Over Total0-30 31-60 61-90 90 Alabama Tourism Bayside Bungalows Others inot shown to save space)17400 6,900 8.500 Xcitng Xcursions S 230 $110 $ 90 $ 30 $ 410 900 410 1100 390 390 Total Accounts Recervable $18.430 $ 7.400 $8.590 $1130 $1,3t0 Estimated uncollectible ( 3% 10% 20% 30% 2.00 points Required: 1. For items (aj- analyze the amount and direction or- 1 of effects on specific financial statement accounts and the overal accounting equation (Enter any decreases to account balances with a Type here to search bp

Solution

Answer 1. S. No. Assets = Liabilities + Stockholder\'s Equity a. Accounts Receivable $41,000 = + Service Revenue $41,000 b. Allowance for Doubtful Accounts -$820 = + Bad Debts -$820 c. Cash $20,500 = + Accounts Receivable -$20,500 = + d. Accounts Receivable             -150 = + Allowance for Doubtful Accounts              150 = + e. Accounts Receivable $31,000 = + Service Revenue $31,000 f. Allowance for Doubtful Accounts -$620 = + Bad Debts -$620 g Cash -$2,600 = + Notes receivable $2,600 = + h-1. Accounts Receivable              150 = + Allowance for Doubtful Accounts             -150 = + h-2. Cash              150 = + Accounts Receivable             -150 = + i. Interest receivable $13 = + Interest Revenue $13 j. Allowance for Doubtful Accounts -$490 = + Bad Debts -$490 Answer-2: Journal Entry Cr. Amount Date Particulars Dr. Amt. a. Accounts Receivable                                   Dr. 41000    To Service Revenue 41000 b. Bad Debts                                                        Dr. 820    To Allowance for Doubtful Accounts 820 c. Cash                                                                  Dr. 20500 To Accounts Receivables 20500 d. Allowance for Doubtful Accounts        Dr.              150 To Accounts Receivables 150 e. Accounts Receivable                                   Dr. 31000    To Service Revenue 31000 f. Bad Debts                                                        Dr. 620    To Allowance for Doubtful Accounts 620 g. Notes Receivables                                      Dr. 2600 To Cash 2600 h-1. Accounts Receivable                                   Dr.              150    To Allowance for Doubtful Accounts 150 h-2. Cash                                                                  Dr.              150 To Accounts Receivables 150 i. Interest Receivable                                    Dr. 13 To Interest revenue 13 j. Bad Debts                                                        Dr. 490    To Allowance for Doubtful Accounts 490 Working Note-1 Estimated Uncollectible = $7400 X 3% + $8590 X 10% + $1,130 X 20% + $1,310 X 30% Estimated Uncollectible = $1700 WEB WIZARD INC., Partial Balance Sheet at March 31 Assets Current Assets: Accounts Receviable $18,430 Less: Allownace for Doubtful Debts ($1,700) Accounts Receivable, Net of Allowance $16,730 Note Receivable $2,600 Interest Receivable $13 4) Web Wizard would repot Bad Debt Expense Before Income From Operations Interest Revenue After Income From Operations