In: Accounting
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:
Number of Days Unpaid | |||||||||||||||
Customer | Total | 0-30 | 31-60 | 61-90 | Over 90 | ||||||||||
Altavista Tourism | $ | 200 | $ | 100 | $ | 80 | $ | 20 | |||||||
Bayling Bungalows | 400 | $ | 400 | ||||||||||||
Others (not shown to save space) | 17,000 | 6,800 | 8,400 | 1,000 | 800 | ||||||||||
Xciting Xcursions | 400 | 400 | |||||||||||||
Total Accounts Receivable | $ | 18,000 | $ | 7,300 | $ | 8,480 | $ | 1,020 | $ | 1,200 | |||||
Estimated uncollectable (%) | 2 | % | 10 | % | 20 | % | 40 | % | |||||||
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.)
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.)
2. Show how the receivables related to these
transactions would be reported in the current assets section of a
classified balance sheet. (Amounts to be deducted should be
indicated by a minus sign.)
3. Name the accounts related to Accounts
Receivable and Note Receivable that would be reported on the income
statement and indicate whether they would appear before or after
Income from Operations.