The following information applies to the questions displayed below] Web Wizard,

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The following information applies to the questions displayed below] Web Wizard, inc has provided information technology services for several years. The company uses the percentage of credit sales method to estmate 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 partial list of transactions during the first quarter a. During January, the company provided services for $44,000 on credit b. On January 31, the company estimated bad debts using 1 percent of credit sales c. On February 4, the company collected $22,000 of accounts recelvable. d. On February 15, the company wrote off a $150 account recelvable e. During February. the company provided services for $34,000 on credit On February 28, the company estimated bad debts using 1 percent of credit sales g on March 1, the company loaned S2200 to an employee who signed a 6% note, due in 6 months. h. On March 15, the company collected $150 on the account written off one month earler . On March 31, the company accrued Interest earned on the note J On March 31, the company adjusted for uncollectible accounts, based on an aging analysis (below) Allowance for Doubtful Accounts has an unadjusted credit balance of $1,240 Number of Days Unpaid Total 0-30 31-60 61-90 Over 90 $ 230 S 110$ 90 $ 30 $ 440 Bayside Bungalows Others (not shown to save space) Xciting Xcursions 440 1100 900 7200 390 8.800 18.000 390 $19,060 $7700 $8,890 $1,130 $1,340 Total Accounts Receivable Estimated uncollectible (%) 2% 10% 20% 30% 2. 2.00 points velue O Type here to search

Explanation / Answer

ASSETS AMOUNT LIABILITIES AMOUNT SHAREHOLDERS EQUITY AMOUNT a DEBTORS (+) 44000 INCOME (+) 44000 b DEBTORS (-) 440 BADDEBTS (-) 440 c CASH/BANK (+) 22000 DEBTORS (-) 22000 d DEBTORS (-) 150 BAD DEBTS (-) 150 e DEBTORS (+) 34000 INCOME (+) 34000 f DEBTORS (-) 340 BAD DEBTS (-) 340 g CASH/BANK (-) 2200 LOAN TO EMPLOYEE (+) 2200 h CASH/BANK (+) 150 BAD DEBTS RECOVERED (+) 150 I INTEREST ACCRUED (+) 66 INTEREST (+) 66 J DEBTORS (-) 1240 ALLOWANCE FOR DOUBTFUL DEBTS (-) 1240 TOTAL 76046 -1240 77286 ASSETS = LIABILITIES + SHAREHOLDERS EQUITY

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