Web Wizard, Inc., has provided information technology services for several years

Question

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 $31,000 on credit b. On January 31, the company estimated bad debts using 2 percent of credit sales. c on February 4, the company collected $15,500 of accounts receivable. d. On February 15, the company wrote off a $150 account receivable. e. During February, the company provided services for $21,000 on credit f 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 i 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 $1,110 Number of Days Unpaid Total e-30 31-60 61-90 Over 90 $ 230 110 s9030 Customer Alabama Tourism Bayside Bungalows Others (not shown to save space) xciting Xcursions $ 310 15,400 5,907,500 1,100 900 $16,330 $ 6,400 $7,59 1,130 s 1,210 310 390 390 Total Accounts Receivable Estimated uncollectible (%) 3% 10% 20%

Explanation / Answer

3.

Working:

Allowance for Doubtful Accounts (as per aging analysis)

Interest receivable on note = $2600 x 6% x 1/12 = $13

4.

WEB WIZARD, INC. Partial Balance Sheet At March 31 Assets Current Assets: Accounts Receivable 16330 Less: Allowance for Doubtful Accounts 1540 Accounts Receivable, Net of Allowance 14790 Notes Receivable 2600 Interest Receivable 13

Related Questions

Navigate

• Browse (All)
• Browse W
• Subjects

---

---

Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.