Web Wizard, Inc., 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 $40,000 on credit. b) On January 31, the company estimated bad debts using 1 percent of credit sales. c) On February 4, the company collected $20,000 of accounts receivable. d) On February 15, the company wrote of a $100 account receivable. e) During February, the company provided services for $30,000 on credit. f) On February 28, the company estimated bad debts using 1 percent of credit sales. B) On March 15, the company collected $100 on the account written off one month earlier. h) 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 $1,200. Customer Alabama Tourism Bayside Bungalows Others (not shown) Xciting Xcursions Total Accounts Receivable Estimated Uncollectible (%) Estimated Uncollectible ($) Total 0-30 days 31-60 day: 61-90 day: Over 90 di $ 200 $ 100 $ 80 $ 20 400 400 17,000 6,800 8,400 1,000 800 400 400 $ 18,000 $ 7,300 $ 8,480 $ 1,020 $ 1,200 2% 10% 20% 40% Required 1. Estimate the uncollectible in $ using the aging of accounts receivable method. 2. For all items, prepare the journal entries. Fraud Investigators Inc. operates a fraud detection service. Required: Prepare journal entries for each transaction below. a. On March 31, 10 customers were billed for detection services totaling $25,000. b. On October 31, a customer balance of $1,500 from a prior year was determined to be uncollectible and was written off. c. On December 15, a customer paid an old balance of $900, which had been written off in a prior year. d. On December 31, $500 of bad debts were estimated and recorded for the year. dr (a) (b) (c) Accounts Receivable Allowance for Doubtful Accounts 900 900 (d) Web Wizard, Inc., 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 $40,000 on credit. b) On January 31, the company estimated bad debts using 1 percent of credit sales. c) On February 4, the company collected $20,000 of accounts receivable. d) On February 15, the company wrote of a $100 account receivable. e) During February, the company provided services for $30,000 on credit. f) On February 28, the company estimated bad debts using 1 percent of credit sales. B) On March 15, the company collected $100 on the account written off one month earlier. h) 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 $1,200. Customer Alabama Tourism Bayside Bungalows Others (not shown) Xciting Xcursions Total Accounts Receivable Estimated Uncollectible (%) Estimated Uncollectible ($) Total 0-30 days 31-60 day: 61-90 day: Over 90 di $ 200 $ 100 $ 80 $ 20 400 400 17,000 6,800 8,400 1,000 800 400 400 $ 18,000 $ 7,300 $ 8,480 $ 1,020 $ 1,200 2% 10% 20% 40% Required 1. Estimate the uncollectible in $ using the aging of accounts receivable method. 2. For all items, prepare the journal entries. Fraud Investigators Inc. operates a fraud detection service. Required: Prepare journal entries for each transaction below. a. On March 31, 10 customers were billed for detection services totaling $25,000. b. On October 31, a customer balance of $1,500 from a prior year was determined to be uncollectible and was written off. c. On December 15, a customer paid an old balance of $900, which had been written off in a prior year. d. On December 31, $500 of bad debts were estimated and recorded for the year. dr (a) (b) (c) Accounts Receivable Allowance for Doubtful Accounts 900 900 (d)
