Davos Company performed services on account for $160,000 in Year 1. Davos collected $120,000 cash from accounts receivable during Year 1, and the remaining $40,000 was collected in cash during Year 2.

Required
a. Record the Year 1 transactions in T-accounts.
b. Show the Year 1 transactions in a horizontal statements model like the following one:

c. Determine the amount of revenue Davos would report on the Year 1 income statement.
d. Determine the amount of cash flow from operating activities Davos would report on the Year 1 statement of cash flows.
e. Open a T-account for Retained Earnings, and close the Year 1 Service Revenue account to the Retained Earnings account.
f. Record the Year 2 cash collection in the appropriate T-accounts.
g. Show the Year 2 transaction in a horizontal statements model like the one shown in Requirement b.
h. Assuming no other transactions occur in Year 2, determine the amount of net income and the net cash flow from operating activities for Year 2.

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Balance Sheet Statement of Cash Income Statement = Llab. + Stk. Equlty Assets Flows Ret. Earn. Cash + Accts. Rec. = Exp. Rev. Net Inc.