Tyler Service Co. experienced the following transactions for 2014, its first year of operations: 1. Provided $86,000 of services on account. 2. Collected $72,000 cash from accounts receivable. 3. Paid $39,000 of salaries expense for the year. 4. Tyler adjusted the accounts using the following information from an accounts receivable aging schedule:

Number of Days Amount % to Be Uncollectible Allowance Balance

Current $7,500.01

0-30 2,000.05

31-60 1,500.10

61-90 1,000.30

Over 90 days 2,000.50

Organize the information in accounts under an accounting equation

Assets = Liaiblities + Equity

Cash A/R Allowancwe = Revenues - Salaries - bad debt

1 86000 86,000

2 72,000 (72,000)

3 (39,000) (39,000)

4 (1,625) (1,625)

Totals 33,000 + 14,000 - 1,625 = 86,000 - 39,000 - 1,625

45,375.00 45,375.00

Explanation:

We multiply the outstanding account receivable by their probability accordign to the aging stimations.

7,500 x 0.01 = 75

2,000 x 0.05 = 100

1,500 x 0.10 = 150

1,000 x 0.30 = 300

2,000 x 0.50 = 1,000

Total 1,625

This amount decreases the net amount of recievables and recognize a bad debt expense for that amount as well.

Then, we add up the assets (cash and net receivables)

and make sure it matches our equity accounts (revenues less expenses)