PA8-4 Accounting for Accounts and Notes Receivable Transactions [LO 8-2, LO 8-3] Web Wizard, Inc., has provided information 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 of 2013. a. During January, the company provided services for $45,000 on credit. b. On January 31, the company estimated bad debts using 2 percent of credit sales. c. On February 4, the company collected $22,500 of accounts receivable. d. On February 15, the company wrote off a $200 account receivable. e. During February, the company provided services for $35,000 on credit. f. On February 28, the company estimated bad debts using 2 percent of credit sales. g. On March 1, the company loaned $2,000 to an employee who signed a 6% note, due in 6 months. h. On March 15, the company collected $200 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 $1,250. Customer Alabama Tourism Bayside Bungalows Others (not shown to save space) Xciting Xcursions Total Accounts Receivable Estimated uncollectible (%) Number of Days Unpaid Total 0-30 31-60 61-90 $200 $ 120 $ 70 $ 10 450 18,100 7,300 380 380 19,130 8,900 1,200 3% Over 90 $ 450 700 $7,800 $8,970 $1,210 $ 1,150 10% 20% 40% 1-a. For items a-j, analyze the amount and direction (+ for increase or for decrease) of effects on specific financial statement accounts and the overall accounting equation. (Enter all amounts as positive values.) a. b. C. d. e. f. 9. h. Accounts Receivable. i. j. Assets + 200 = Liabilities Stockholders' Equity 1-b. Prepare the journal entries for the above items. (If no entry is required for a transaction/event, select "No Journal Entry Required" in the first account field.) view transaction list Transaction a b d e f g h(1) h(2) i j journal entry worksheet General Journal No Transaction Recorded No Transaction Recorded No Transaction Recorded No Transaction Recorded No Transaction Recorded No Transaction Recorded No Transaction Recorded No Transaction Recorded No Transaction Recorded No Transaction Recorded No Transaction Recorded Debit Credit 2. Show how Accounts Receivable, Notes Receivable, and their related accounts would be reported in the current assets section of a classified balance sheet. Current Assets: WEB WIZARD, INC. Balance Sheet (partial) At March 31, 2013 Assets 3. Service Revenue is one income statement account that is related to Accounts Receivable. Name two other accounts related to Accounts Receivable and Note Receivable that would be reported on the income statement and indicate whether they would appear before, or after, Income from Operations. Web Wizard would report Income from Operations Income from Operations