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)

better off having an absolute

month 1 start amount =$3287.90 interest=(3287.90x0.0145/12)3.97 total to pay=$3291.81 paid =$1200 balance =$2,091.87

month 2 starting amount= $2,091.87 interest =$25.28 total to pay =$2117.15 paid =$1200 balance $917.15

month 3 starting amount =$917.15 interest =$11.08 total to pay =$928.23 paid =$928.23 balance =$0 total to pay 1200+1200+928.23 = $3328.23 it will take 3 months to pay a total of $3328.23