Answer:
Provided $91,000 of services on account.
Collected $72,000 cash from accounts receivable.
Paid $36,000 of salaries expense for the year.
Adjusted the accounts using the following information from an accounts receivable aging schedule:
Number of days Amount % Likely to be uncollectible $
Current $7,800 0.01 $78
0-30 $4,500 0.05 $225
31-60 $2,000 0.10 $200
61-90 $2,200 0.20 $440
Over 90 $2,500 0.50 $1,250
totals $19,000 $2,193
a) Provided $91,000 of services on account.
Dr Accounts receivable 91,000
Cr Service revenue 91,000
Collected $72,000 cash from accounts receivable.
Dr Cash 72,000
Cr Accounts receivable 72,000
Paid $36,000 of salaries expense for the year.
Dr Wages expense 36,000
Cr Cash 36,000
Allowance for doubtful accounts
Dr Bad debt expense 2,193
Cr Allowance for doubtful accounts 2,193
Cash
debit credit
72,000
36,000
36,000
Accounts receivable
debit credit
91,000
72,000
19,000
Allowance for doubtful accounts
debit credit
2,193
Service revenue
debit credit
91,000
Wages expense
debit credit
36,000
Bad debt expense
debit credit
2,193
b) Vulcan Service Co.
Income Statement
For the year ended December 31, year 1
Revenue $91,000
Expenses:
Wages expense $36,000
Bad debt expense $2,193 ($38,193)
Net income $52,807
c) net realizable value of accounts receivable = $19,000 - $2,193 = $16,807