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[The following information applies to the questions displayed below.] Execusmart Consultants has provided business consulting services for several years. The company has been using the

[The following information applies to the questions displayed below.]

Execusmart Consultants has provided business consulting services for several years. The company has been using the percentage of credit sales method to estimate bad debts but switched at the end of the first quarter this year to the aging of accounts receivable method. The company entered into the following partial list of transactions.

  1. During January, the company provided services for $230,000 on credit.
  2. On January 31, the company estimated bad debts using 1 percent of credit sales.
  3. On February 4, the company collected $115,000 of accounts receivable.
  4. On February 15, the company wrote off a $650 account receivable.
  5. During February, the company provided services for $180,000 on credit.
  6. On February 28, the company estimated bad debts using 1 percent of credit sales.
  7. On March 1, the company loaned $15,000 to an employee, who signed a 10% note due in 3 months.
  8. On March 15, the company collected $650 on the account written off one month earlier.
  9. On March 31, the company accrued interest earned on the note.
  10. 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 had an unadjusted credit balance of $6,600.

Number of Days Unpaid
Customer Total 030 3160 6190 Over 90
Arrow Ergonomics $ 1,900 $ 800 $ 700 $ 400
Asymmetry Architecture 2,300 $ 2,300
Others (not shown to save space) 83,500 31,900 42,000 5,300 4,300
Weight Whittlers 2,300 2,300
Total Accounts Receivable $ 90,000 $ 35,000 $ 42,700 $ 5,700 $ 6,600
Estimated Uncollectible (%) 2 % 20 % 30 % 40 %

Required:

  1. For items (a)(j), analyze the amount and direction (+ or ) of effects on specific financial statement accounts and the overall accounting equation. TIP: In item (j), you must first calculate the desired ending balance before adjusting the Allowance for Doubtful Accounts. (Do not round intermediate calculations. Enter any decreases to Assets, Liabilities, or Stockholders Equity with a minus sign.)

  2. Prepare the journal entries for items (a)(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.)

  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.

  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.

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