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Number of Days Unpaid Elite Events Corporation has provided event planning servi

ID: 2394609 • Letter: N

Question

Number of Days Unpaid

Elite Events Corporation has provided event planning 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.

On March 1, the company loaned $18,000 to an employee who signed a 4% note, due in 9 months.

On March 31, the company adjusted for uncollectible accounts, based on the following aging analysis. Allowance for Doubtful Accounts has an unadjusted credit balance of $9,300.

For items (a)–(j), analyze the amount and direction (+ or ?) of effects on specific financial statement accounts and the overall accounting equation.

Prepare the journal entries for items (a)–(j).

Show how Accounts Receivable, Notes Receivable, and their related accounts would be reported in the current assets section of a classified balance sheet?

Number of Days Unpaid

  Customer Total 0-30 31-60 61-90 Over 90     Aerosmith $ 2,000 $ 1,000 $ 1,000     Biggie Small 2,000 $ 1,000 $ 1,000       Others (not shown to save space) 100,200 39,300 42,300 9,300 9,300       ZZ Top 7,300 7,300   Total Accounts Receivable $ 111,500 $ 47,600 $ 43,300 $ 10,300   $ 10,300     Estimated uncollectible (%) 5% 15% 25% 40%

Explanation / Answer

S. No. Accoutn Tittle Amount Amount a Accounts receivable $330,000              Service revenue $330,000 b Bad debt expense ($330000*2%) $6,600              Allowance for doubtful accounts $6,600 c Cash $280,000           Accounts receivable $280,000 d Allowance for dobtful accounts $3,300            Accounts receivable $3,300 e Accounts receivable $280,000              Service revenue $280,000 f Bad debt expense ($280000*2%) $5,600              Allowance for doubtful accounts $5,600 g Notes receivable $18,000              Cash $18,000 h Accounts receivable $3,300             Allowance for doubtful accounts $3,300 Cash $3,300            Accounts receivable $3,300 i Interest receivable ($18000*4%*1/12) $60            Interest revenue $60 j Bad debt expense ($15570-$9300) $6,270             Allowance for doubtful accounts $6,270 0-30 days 2380 ($47600*5%) 31-60 days 6495 ($43300*15%) 61-90 days 2575 ($10300*25%) over 90 days 4120 ($10300*40%) Total 15570