During the first year of operation, 2018, McGinnis Appliance recognized $275,000 of service revenue on account. At

Question:

During the first year of operation, 2018, McGinnis Appliance recognized $275,000 of service revenue on account. At the end of 2018, the accounts receivable balance was $55,300. Even though this is his first year in business, the owner believes he will collect all but about 3 percent of the ending balance.

Required

a. What amount of cash was collected by McGinnis during 2018?

b. Assuming the use of an allowance system to account for uncollectible accounts, what amount should McGinnis record as uncollectible accounts expense in 2018?

c. What is the net realizable value of receivables at the end of 2018?

d. Show the effect of these transactions on the financial statements by recording the appropriate amounts in a horizontal statements model like the one shown here. When you record amounts in the Cash Flow column, indicate whether the item is an operating activity (OA), investing activity (IA), or financing activity (FA). The letters NA indicate that an element is not affected by the event.

During the first year of operation, 2018, McGinnis Appliance recognized

Financial Statements
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...