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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
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 selected transactions during the first quarter of 2017 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 off 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. g. On March 1, the company loaned $2,400 to an employee who signed a 6 percent note, due in six months. h. On March 15, the company collected $100 on the account written off one month earlier. i. On March 31, the company adjusted for uncollectable 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 j. On March 31, the company accrued interest earned on the note Number of Days Unpaid 31-60 Total 0-30 61-90 Over 90 Customer $ 100 Altavista Tourism 200 $ 80 20 Bayling Bungalows Others (n Xciting Xcursions 400 400 17,000 6,800 shown to 8,400 1,000 800 space) 400 400 Total Accounts Receivable $18,000 $8,480 $1,020 $1,200 $7,300 Estimated uncollectable (%) 2% 10% 20% 40% Required: 1-a. For items (a) through (j), analyze the amount and effects on specific financial statement accounts and the overall accounting equation. (Enter any decreases to the account with a minus sign.) Shareholders' Equity Transaction Assets Liabilities a. b. C. d. . f. g. h1. reversal of write-off h2. collection i j 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 Journal entry worksheet 3 8.... 1 2 4. 5 6 7 11 Record the services provided on credit. Note: Enter debits before credits. Transaction General Journal Debit Credit . Clear entry Record entry View general journal Journal entry worksheet 2 3 5 6 7 8 1 4 11 Record the company's estimated bad debts using 1 percent of credit sales. Note: Enter debits before credits. Debit Transaction General Journal Credit b. Journal entry worksheet
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