WEB WIZARD, INCORPORATED Partial Balance Sheet At March 31 Assets Current Assets: Accounts Receivable, Net of Allowance 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. 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 $43,000 on credit. b. On January 31, the company estimated bad debts using 2 percent of credit sales. c. On February 4, the company collected $21,500 of accounts receivable. d. On February 15, the company wrote off $100 account receivable. e. During February, the company provided services for $33,000 on credit. f. On February 28, the company estimated bad debts using 2 percent of credit sales. g. On March 1, the company loaned $3,000 to an employee, who signed a 6% note, due in 6 months. h. On March 15, the company collected $100 on the account written off one month earlier. i. 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 has an unadjusted credit balance of $1,230. Number of Days Unpaid 31 to 60 61 to 90 $ 80 $ 20 0 to 30 $ 100 Over 90 Customer Alabama Tourism Bayside Bungalows Others (not shown to save space) Xciting Xcursions Total Accounts Receivable Estimated Uncollectible (%) Total $ 200 430 17,600 400 $ 18,630 $ 430 800 8,700 1,000 7,100 400 $ 7,600 3% $ 8,780 15% $ 1,020 20% 1,230 30% 18-4 (Algo) Part 2 Journal entry worksheet 1 2 3 4 5 6 7 8 11 > Record service revenue of $43,000 sold on account during January. Note: Enter debits before credits. Transaction General Journal Debit Credit a. Record entry Clear entry View general journal Record the adjusting entry for bad debts as of January 31 using 2 percent of credit sales. Note: Enter debits before credits. Transaction General Journal Debit Credit b. Record entry Clear entry View general journal Record service revenue of $33,000 provided on account during February. Note: Enter debits before credits. Transaction General Journal Debit Credit e. Record entry Clear entry View general journal Record the adjusting entry for bad debts as of February 28 using 2 percent of 2 credit sales. Note: Enter debits before credits. Transaction General Journal Debit Credit f. Record entry Clear entry View general journal 1 2 3 4 5 6 7 8 11 > IIII. Record the receipt of a note on March 1 for a $3,000 loan to an employee. Note: Enter debits before credits. Transaction General Journal Debit Credit g. U I w Record the reversal of a $100 account receivable previously written off one month earlier. Note: Enter debits before credits. General Journal Debit Credit Transaction h(1). Record entry Clear entry View general journal