. During January, the company provided services for $260,000 on credit. b. On January 31, the company estimated bad debts using 1 percent of credit sales. c. On February 4, the company collected $130,000 of accounts receivable. d. On February 15, the company wrote off $800 account receivable. . During February, the company provided services for $210,000 on credit. f. On February 28, the company estimated bad debts using 1 percent of credit sales. g. On March 1, the company loaned $18,000 to an employee, who signed a 8% note due in 3 months. h. On March 15, the company collected $800 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 had an unadjusted credit balance of $7,200. Customer Arrow Ergonomics Asymmetry Architecture Others (not shown to save space) Weight Whittlers Total Accounts Receivable Estimated Uncollectible (8) Total $ 1,000 2,600 89,100 2,600 $ 95,300 0 to 30 $ 500 33,900 2,600 $ 37,000 4% Number of Days Unpaid 31 to 60 61 to 90 $ 400 $ 100 45,000 $ 45,400 20% 5,600 $ 5,700 30% Over 90 $ 2,600 4,600 $ 7,200 40%
. During January, the company provided services for $260,000 on credit. b. On January 31, the company estimated bad debts using 1 percent of credit sales. c. On February 4, the company collected $130,000 of accounts receivable. d. On February 15, the company wrote off $800 account receivable. . During February, the company provided services for $210,000 on credit. f. On February 28, the company estimated bad debts using 1 percent of credit sales. g. On March 1, the company loaned $18,000 to an employee, who signed a 8% note due in 3 months. h. On March 15, the company collected $800 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 had an unadjusted credit balance of $7,200. Customer Arrow Ergonomics Asymmetry Architecture Others (not shown to save space) Weight Whittlers Total Accounts Receivable Estimated Uncollectible (8) Total $ 1,000 2,600 89,100 2,600 $ 95,300 0 to 30 $ 500 33,900 2,600 $ 37,000 4% Number of Days Unpaid 31 to 60 61 to 90 $ 400 $ 100 45,000 $ 45,400 20% 5,600 $ 5,700 30% Over 90 $ 2,600 4,600 $ 7,200 40%
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
Related questions
Concept explainers
Bad Debts
At the end of the accounting period, a financial statement is prepared by every company, then at that time while preparing the financial statement, the company determines among its total receivable amount how much portion of receivables is collected by the company during that accounting period.
Accounts Receivable
The word “account receivable” means the payment is yet to be made for the work that is already done. Generally, each and every business sells its goods and services either in cash or in credit. So, when the goods are sold on credit account receivable arise which means the company is going to get the payment from its customer to whom the goods are sold on credit. Usually, the credit period may be for a very short period of time and in some rare cases it takes a year.
Question
![Required information
CP8-4 (Algo) Accounting for Accounts and Notes Receivable Transactions [LO 8-2, LO 8-3]
[The following information applies to the questions displayed below.]
Execusmart Consultants has provided business consulting services for several years. The company has been using the
percentage of credit sales method to estimate bad debts but switched at the end of the first quarter this year to the aging
of accounts receivable method. The company entered into the following partial list of transactions.
a. During January, the company provided services for $260,000 on credit.
b. On January 31, the company estimated bad debts using 1 percent of credit sales.
c. On February 4, the company collected $130,000 of accounts receivable.
d. On February 15, the company wrote off $800 account receivable.
e. During February, the company provided services for $210,000 on credit.
f. On February 28, the company estimated bad debts using 1 percent of credit sales.
g. On March 1, the company loaned $18,000 to an employee, who signed a 8% note due in 3 months.
h. On March 15, the company collected $800 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 had
an unadjusted credit balance of $7,200.
Customer
Arrow Ergonomics
Asymmetry Architecture
Others (not shown to save space)
Weight Whittlers
Total Accounts Receivable
Estimated Uncollectible (%)
CP8-4 (Algo) Part 3
Current Assets:
EXECUSMART CONSULTANTS
Balance Sheet (Partial)
At March 31
Assets
Total
$ 1,000
Accounts Receivable
Allowance for Doubtful Accounts
Accounts Receivable, Net of Allowance
Notes Receivable (short-term)
Interest Receivable
2,600
89,100
2,600
0 to 30
$ 500
33,900
2,600
$ 95,300 $ 37,000
4%
Number of Days Unpaid
31 to 60
61 to 90
$ 400
$ 100
45,000
$ 45,400
20%
5,600
$ 5,700
30%
Over 90
3. Show how Accounts Receivable, Notes Receivable, and their related accounts would be reported in the current assets section of a
classified balance sheet at the end of the quarter on March 31.
$ 2,600
4,600
$ 7,200
40%](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2F2b3f7f60-ea7d-412d-bfab-14e1e3d92302%2F0b726198-0241-4921-98f1-7cbc62533f56%2F4mdy8j_processed.png&w=3840&q=75)
Transcribed Image Text:Required information
CP8-4 (Algo) Accounting for Accounts and Notes Receivable Transactions [LO 8-2, LO 8-3]
[The following information applies to the questions displayed below.]
Execusmart Consultants has provided business consulting services for several years. The company has been using the
percentage of credit sales method to estimate bad debts but switched at the end of the first quarter this year to the aging
of accounts receivable method. The company entered into the following partial list of transactions.
a. During January, the company provided services for $260,000 on credit.
b. On January 31, the company estimated bad debts using 1 percent of credit sales.
c. On February 4, the company collected $130,000 of accounts receivable.
d. On February 15, the company wrote off $800 account receivable.
e. During February, the company provided services for $210,000 on credit.
f. On February 28, the company estimated bad debts using 1 percent of credit sales.
g. On March 1, the company loaned $18,000 to an employee, who signed a 8% note due in 3 months.
h. On March 15, the company collected $800 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 had
an unadjusted credit balance of $7,200.
Customer
Arrow Ergonomics
Asymmetry Architecture
Others (not shown to save space)
Weight Whittlers
Total Accounts Receivable
Estimated Uncollectible (%)
CP8-4 (Algo) Part 3
Current Assets:
EXECUSMART CONSULTANTS
Balance Sheet (Partial)
At March 31
Assets
Total
$ 1,000
Accounts Receivable
Allowance for Doubtful Accounts
Accounts Receivable, Net of Allowance
Notes Receivable (short-term)
Interest Receivable
2,600
89,100
2,600
0 to 30
$ 500
33,900
2,600
$ 95,300 $ 37,000
4%
Number of Days Unpaid
31 to 60
61 to 90
$ 400
$ 100
45,000
$ 45,400
20%
5,600
$ 5,700
30%
Over 90
3. Show how Accounts Receivable, Notes Receivable, and their related accounts would be reported in the current assets section of a
classified balance sheet at the end of the quarter on March 31.
$ 2,600
4,600
$ 7,200
40%
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