Fundamentals of Financial Accounting 4th Edition by Fred Phillips,Robert Libby,Patricia Libby

Exercise 40

Recording and Determining the Effects of Write-Offs, Recoveries, and Bad Debt Expense Estimates on the Balance Sheet and Income Statement
Fraud Investigators Inc. operate; a fraud detection service.
Required:
1. It Prepare journal entries for each transaction below.
a. On March 31, 10 customers were billed for detection services totaling $25,000.
b. On October 31, a customer balance of $1,500 from a prior year was determined to be uncollectible and was written off.
c. On December 15, a customer paid an old balance of $900, which had been written off in a prior year.
d. On December 31, $500 of bad debts were estimated and recorded for the year.
2. Complete the following table, indicating the amount and effect (+ for increase, for decrease, and NE for no effect) of each transaction. Ignore income taxes.