During the first year of operation, 2018, Direct Service Co. recognized $290,000 of service revenue on account.
Question:
During the first year of operation, 2018, Direct Service Co. recognized $290,000 of service revenue on account. At the end of 2018, the accounts receivable balance was $46,000. For this first year in business, the owner believes uncollectible accounts expense will be about 1 percent of sales on account.
Required
a. What amount of cash did Direct Service collect from accounts receivable during 2018?
b. Assuming Direct Service uses the allowance method to account for uncollectible accounts, what amount should Direct Service record as uncollectible accounts expense for 2018?
c. What is the net realizable value of receivables at the end of 2018?
d. Show the effects of the given transactions on the financial statements by recording the appropriate amounts in a horizontal statements model like the one shown here. In the Cash Flow column, indicate whether the item is an operating activity (OA), investing activity (IA), or financing activity (FA). Use NA for not affected.
.png)
Financial statements are the standardized formats to present the financial information related to a business or an organization for its users. Financial statements contain the historical information as well as current period’s financial... Accounts Receivable
Accounts receivables are debts owed to your company, usually from sales on credit. Accounts receivable is business asset, the sum of the money owed to you by customers who haven’t paid.The standard procedure in business-to-business sales is that...
Step by Step Answer:
a Services on Account 290000 Less Ending Balance of Accounts Receivable 46...View the full answer
Survey of Accounting
ISBN: 978-1259631122
5th edition
Authors: Thomas Edmonds, Christopher Edmonds, Philip Olds, Frances McNair, Bor Yi Tsay
