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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
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 $360,000 on credit. b. On January 31, the company estimated bad debts using 1 percent of credit sales. c. On February 4, the company collected $310,000 of accounts receivable. d. On February 15, the company wrote off a $3,600 account receivable. e. During February, the company provided services for $310,000 on credit. f. On February 28, the company estimated bad debts using 1 percent of credit sales. g. On March 1, the company loaned $14,000 to an employee who signed a 6% note, due in 9 months. h. On March 15, the company collected $3,600 on the account written off one month earlier 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 $9,600. Number of Days Unpaid Customer Total0-30 31-6061-90Over 90 $ 2,000 $1,000 $ 1,000 Aerosmith Biggie Small Others (not shown to save space) ZZ Top $1,000 1,000 9,600 2,000 101,400 39,600 42,600 9,600 7600 7600 Total Accounts Receivable Estimated uncollectible (%) $113,000 $48,200 $43,600 $ 10,600 $10,600 40% 5% 10% 20% 9
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