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

Question

[The following information applies to the questions displayed below.] Fraud Investigators Inc. operates a fraud detection service. a. On March 31, 10 customers were billed for detection services totaling $30,000. b. On October 31, a customer balance of $1,750 from a prior year was determined to be uncollectible and was written off c. On December 15, a customer paid an old balance of $850, which had been written off in a prior year. d. On December 31, $550 of bad debts were estimated and recorded for the year.

Explanation / Answer

Journal entries Date Account titles Debit Credit a 31-Mar Accounts Receivable $     30,000 Service Revenue $     30,000 (billed for detection service for 10 customers) 15-Oct Allowance for Doubtful Accounts $        1,750 Accounts Receivable $        1,750 (written off a balance as uncollectible) 15-Dec Accounts Receivable $           850 Allowance for Doubtful Accounts $           850 (received from customer which had been written off) 15-Dec Cash $           850 Accounts Receivable $           850 (received from customer which had been written off) 31-Dec Bad Debt - Expense $           550 Allowance for Doubtful Accounts $           550 (Paid for Insurance policy)

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