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Required Information PA8-4 (Algo) Accounting for Accounts and Notes Receivable Transactions (LO 8-2, LO 8-3) (The following information applies to the questions displayed below) Web Wizard, Incorporated, 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 $37,000 on credit. b On January 31, the company estimated bad debts using 2 percent of credit sales c. On February 4, the company collected $18,500 of accounts receivable d On February 15, the company wrote off $150 account receivable. e. During February, the company provided services for $27,000 on credit. On February 28, the company estimated bad debts using 2 percent of credit sales. g. On March 1, the company loaned $2,600 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 earlier 1 On March 31, the company accrued interest earned on the note. 1. 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 has an unadjusted credit balance of $1170 Over 90 Number of Days Unpaid 31 to 60 61 to 90 $ 90 $ 30 Total $ 230 Customer Alabang Tourism 0 to 30 $ 110 On February 28, the company estimated bad debts using 2 percent of credit sales g. On March 1, the company loaned $2,600 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 earlier On March 31, the company accrued interest earned on the note J. 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 hos an unadjusted credit balance of $1,170. Number of Days Unpaid 31 to 60 61 to $90 530 0 to 30 $ 110 Over 90 Total $ 230 370 16,600 390 $ 17,590 5370 900 8,100 Customer Alabama Tourion Bayside Bungalows others (not shown to save space) Xciting Xcursions Total Accounts Receivable Estimated Uncollectible (1) 1,100 6,500 390 $ 7.000 30 $ 8,190 100 $ 1,230 200 $ 1,270 JON PA8-4 (Algo) Part 4 4. Sales Revenue and Service Revenue are two income statement accounts that relate to Accounts Receivable Name two other accounts related to Accounts Receivable and Notes Receivable that would be reported on the income statement and indicate whether each would appear before or after, Income from Operations Web Wizard would report Income from Operations Income from Operations Number of Days Unpaid 31 to 60 61 to 90 $90 $ 30 0 to 30 $ 110 Over 90 Customer Alabama Tourism Bayside Bungalows Others (not shown to save space) Xciting Xcursions Total Accounts Receivable Eatinated Uncollectible (1) Total $ 230 370 16,600 390 $ 17,590 $ 370 900 8,100 1,100 6,500 390 $ 7,000 5.3.190 100 $1,130 200 5 1,270 301 PA8-4 (Algo) Part 4 4. Sales Revenue and Service Revenue are two income statement accounts that relate to Accounts Receivable. Name two other accounts related to Accounts Receivable and Notes Receivable that would be reported on the income statement and indicate whether each would appear before or after, Income from Operations. Web Wizard would report Income from Operations. Income from Operations

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