Elite Events Corporation has provided event planning services for several years.
ID: 2594834 • Letter: E
Question
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 $11,000 to an employee who signed a 6% 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 $8,100.
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.
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 a. During January, the company provided services for $210,000 on credit. b. On January 31, the company estimated bad debts using 2 percent of credit sales c. On February 4, the company collected $160,000 of accounts receivable d. On February 15, the company wrote off a $2,100 account receivable e. During February, the company provided services for $160,000 on credit. f. On February 28, the company estimated bad debts using 2 percent of credit sales g. On March 1, the company loaned $11,000 to an employee who signed a 6% note, due in 9 months h. On March 15, the company collected $2,100 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 the following aging analysis Allowance for Doubtful Accounts has an unadjusted credit balance of $8,100 Number of Days Unpaid Total $ 2,200 $ 1,100 Customer 0-30 31-60 61-90 Over 90 1,100 Aerosmith Biggie Small Others (not shown to save space) 95,400 38,100 41,100 ZZ Top 2,200 $ 1,100 $ 1,100 8,100 8,100 6,100 6,100 42,200 Total Accounts Receivable $105,900 $45,300 $ $ 9,200 $ 9,200 Estimated uncollectible (%) 4% 15% 25% 30%Explanation / Answer
Answer 1. Assets = Liabilities + Stockholders' Equity a. Accounts Receivable 210,000.00 Retained Earnings 210,000.00 b. Allowance for Doubtful Accounts (4,200.00) Retained Earnings (4,200.00) c. Cash 300,000.00 Accounts Receivable (300,000.00) d. Accounts Receivable (2,100.00) Allowance for Doubtful Accounts 2,100.00 e. Accounts Receivable 160,000.00 Retained Earnings 160,000.00 f. Allowance for Doubtful Accounts (3,200.00) Retained Earnings (3,200.00) g. Notes Receivable 11,000.00 Cash (11,000.00) h-1. Accounts Receivable 2,100.00 Allowance for Doubtful Accounts (2,100.00) h-2 Cash 2,100.00 Accounts Receivable (2,100.00) i. Interest Receivable 55.00 Retained Earnings 55.00 j. Allowance for Doubtful Accounts (5,102.00) Retained Earnings (5,102.00) Answer 2. Journal Entry Date Particulars Dr. Amt. Cr. Amt. a. Accounts Receivable Dr. 210,000.00 To Service Revenue 210,000.00 (Record the Services provided to customers) b. Bad Debts Expenses Dr. 4,200.00 To Allowance for Doubtful Accounts 4,200.00 (record the Bad Debt Expenses) c. Cash Dr. 160,000.00 To Accounts Receivable 160,000.00 (Record the cash recd from customers) d. Allowance for Doubtful Accounts Dr. 2,100.00 To Accounts Receivable 2,100.00 (Record the Accounts Receivable W/o) e. Accounts Receivable Dr. 160,000.00 To Service Revenue 160,000.00 (Record the Services provided to customers) f. Bad Debts Expenses Dr. 3,200.00 To Allowance for Doubtful Accounts 3,200.00 (record the Bad Debt Expenses) g. Notes Receivable Dr. 11,000.00 To Cash 11,000.00 (Record the loan given to employee) h-1. Accounts Receivable Dr. 2,100.00 To Allowance for Doubtful Accounts 2,100.00 (Record the accounts receivable reinstated) h-2. Cash Dr. 2,100.00 To Accounts Receivable 2,100.00 (Record the cash recd from customers) i. Interest Receivable Dr. 55.00 To Interest Revenue 55.00 (record the interest accrued on Note) j. Bad Debts Expenses Dr. 5,102.00 To Allowance for Doubtful Accounts 5,102.00 (record the Bad Debt Expenses) Total Number of Days Unpaid 0-30 31-60 60-90 Over 90 Total Accounts Receivable 105,900 45,300 42,200 9,200 9,200 Estimated Uncollectible (%) 4% 15% 25% 30% Amount Uncollectible 13,202 1,812 6,330 2,300 2,760 Answer 3. Elite Events Corporation Balance Sheet (Partial) At March 31 Assets Current Assets Accounts Receivable 105,900 Less: Allowance for Doubtful Accounts (13,202) Net Accounts Receivable 92,698 Notes Receivable 11,000 Interest Receivable - Note 55 Answer 4. Elite Events would Report: Bad Debt Expenses Before Income from Operations Interest Revenue After Income from Operations
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