Question

The following infarmation applies to the questions displayed bolow] Fraud Investigaters incorporated operates a fraud detection service. a. On March 31, 10 customess were billed for detection services totaling $33,000. b. On Octeber 31 , a customer balance of $1,900 trom a prior year was determined to be uncollectble and was written off c. On December 15, a customer pald an old balance of $820, which had been written off in a prior yoar. d. On December 31, $580 of bad debts were estinoted and recorded for the year.

Answer 1

Scenarios a to d describe different aspects of accounting for revenue, bad debts, and recovery of bad debts for a company providing fraud detection services. These entail recognizing revenue upon billing, writing off uncollectible debts, and accounting for recoveries and estimates for future uncollectible amounts.

Step-by-step explanation:

Understanding Business Transaction.

The given scenarios involve various business transactions carried out by Fraud Investigators Incorporated, which operates a fraud detection service. Scenario a mentions that on March 31, services were billed to customers totaling $33,000. This is a straightforward revenue recognition in which the company recognizes its earnings upon billing its clients. Scenario b describes a situation where a customer balance of $1,900, from a prior year, is deemed uncollectible and is thus written off as bad debt, impacting the company's net income. In scenario c, a customer pays an old balance of $820 that had previously been written off, which should be accounted for as a recovery of bad debt. Lastly, scenario d discusses an estimation and recording of $580 as bad debt, which is part of the company's accounting for potential credit losses.
These events are common in businesses that offer credit to customers and need to manage accounts receivable and bad debts accordingly, reflecting them in financial statements.