PA8-4 Accounting for Accounts and Notes Receivable Transactions LO 8-2, LO 8-3] The following information applies to the questions displayed below.] 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 During January, the company provided services for $42,000 on credit. b. On January 31, the company estimated bad debts using 1 percent of credit sales On February 4, the company collected $21,000 of accounts receivable d On February 15, the company wrote off a $200 account receivable During February, the company provided services for $32,000 on credit r On February 28, the company estimated bad debts using 1 9 On March 1, the company loaned $2,800 to an employee who n. On March 15, the company collected $200 on the account written t On March 31, the company accrued interest earned on the note percent of credit sales. signed a 6% note, due in 6 months. off one month earlier. 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 $1,220 Number af Days Unpaid Customer Total0-30 31-60 61-90 90 S 200 120 $ 420 70$ 10 Alabama Tourism Bayside Bungalows Others Inot shown to save space ,500 70OD 8,60D 1200 00 Xciting Xcursions $420 380 380 18,500 $7,500 $8670$1210 $1,120 Total Accounts Recelvable Estimated uncollectible (%) 2%, 10% 20% 35% 2.50 points PA8-4 Part 1 Required For items (a)-(), analyze the amount and direction or -) of effects on specific financial statement accounts and the overall accounting equation. (Enter any decreases to account balances with a minus sign.) 42.000 for Doubtful Accounts Debt Expense (21 owance for Doubtfuil Accounts 200 Recevable 2.000 Revenue 32 for Doubtfuil Accounts Debt Expense e Recelvable 2,800 (2 s Recevable 200 for Doubtful Accounts 200 nterest Receivable Revenue for Doubtful Accounts 431 Debt Expense 431 2.50 points PA8-4 Part 2 2 Prepare the journal entries for items (a)-). (If no entry is required for a transaction/event, select "No Journal Entry Required" in the first account field.) No Transaction General Journal Accounts Receivable 42,000 Service Revenue 42.000 Bad Debt Expense Alowance for Doubtful Accounts 420 21,000 Accounts Receivable 21,000 Alowance for Doubtful Accounts Accounts Receivable 2,000 Service Revenue 2.000 Bad Debt Expense lowance for Doubtful Accounts 2,800 h 1 Accounts Receivable 200 Allowance for Doubtful Accounts 200 200 Accounts Receivable 200 Interest Receivable Interest Ravenue 14 Bad Debt Expense Allowance for Doubtful Accounts 431 431 2.50 points PA8-4 Part 3 Show how Accounts Receivable, Notes Receivable, and their related accounts would be reported in the current assets section of a classified balance sheet. Partial Balance Sheet Financial Statements Difficulty 3 Hard Leaming Objective:08-02 Estimate and report the 2.50 points PA8-4 Part 4 4 Sales Revenue and Service Revenue are two income statement accounts that relate to Accounts Receivable Name two other accounts related to Accounts Receivable and Notes Receivable that would be reported on the income statement and indicate whether each would appear before, or after, Income from Operations. would report Income from Operations Income from Operatons