Required information PA8-4 (Algo) Accounting for Accounts and Notes Receivable Transactions [LO 8-2, LO 8-3] [The following information applies to the questions displayed below.] Web Wizard, Incorporated, 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 $33,000 on credit. b. On January 31, the company estimated bad debts using 2 percent of credit sales. c. On February 4, the company collected $16,500 of accounts receivable. d. On February 15, the company wrote off $200 account receivable. e. During February, the company provided services for $23,000 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 the following aging analysis, which includes the preceding transactions (as well as others not listed). Prior to the adjustment, Allowance for Doubtful Accounts has an unadjusted credit balance of $1,130. Total $ 200 330 15,700 380 0 to 30 $ 120 Number of Days Unpaid 31 to 60 $ 70 61 to 90 $ 10 Over 90 6,100 380 7,700 1,200 $ 330 700 $ 6,600 $ 7,770 $ 1,210 3% 10% 20% $ 1,030 40% Customer Alabama Tourism Bayside Bungalows Others (not shown to save space) Xciting Xcursions Total Accounts Receivable Estimated Uncollectible (%) $ 16,610 PA8-4 (Algo) Part 2 2. Prepare the journal entries for items (a) to (j). (If no entry is required for a transaction/event, select "No Journal Entry Required" in the first account field. Do not round intermediate calculations.) Answer is not complete. 1 No a. Transaction General Journal Debit Credit Accounts Receivable 33,000 2 b. Allowance for Doubtful Accounts 3 C. Cash Accounts Receivable -330 16,500 -16,500 4 d. Allowance for Doubtful Accounts 200 Accounts Receivable -200 5 e. Accounts Receivable 6 f. Allowance for Doubtful Accounts 7 g. Notes Receivable (short-term) Cash 8 h(1). 9 h(2). Accounts Receivable Allowance for Doubtful Accounts Cash Accounts Receivable Accumulated Amortization 10 10 i. Accounts Receivable 11 j. Accounts Payable > > 23,000 -320 2,000 -2,000 200 -200 200 -200 PA8-4 (Algo) Part 3 3. Show how Accounts Receivable, Notes Receivable, and their related accounts would be reported in the current assets section of a classified balance sheet at the end of the quarter on March 31. (Do not round intermediate calculations.) Current Assets: WEB WIZARD, INCORPORATED Partial Balance Sheet At March 31 Assets Accounts Receivable, Net of Allowance 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. Web Wizard would report Income from Operations. Income from Operations