Accouting 5205

Survey of Accounting, Fifth edition by Edmonds ISBN: 9781307078473

After completing Chapter 5, identify the following Events 1-4 based on Exercise 5-5. Identify the impact on the accouting equation, if and how it affects net income and if and how it affects cash. With your answers, you need to explain your reasoning and how you solved the problem. This is especially important for Events 3 and 4 because they involve contra-asset accounting. Do NOT follow the instructions in the texbook. Complete the question based on the example above.

Exercise 5-5 Analyzing financial statement effects of accounting for uncollectible accounts using the percent of revenue allowance method Grover Inc. uses the allowance method to account for uncollectible accounts expense. Grover Inc. experienced the following four accounting events in 2018: 1. Recognized $92,000 of revenue on account. 2. Collected $78,000 cash from accounts receivable. 3. Wrote off uncollectible accounts of $720. 4. Recognized uncollectible accounts expense. Grover estimated that uncollectible accounts expense will be 1 percent of sales on account. Required Show the effect of each event on the elements of the financial statements, using a horizontal state- ments model like the one shown here. Use for increase,--for decrease, and NA for not affected. In the cash flow column, indicate whether the item is an operating activity (OA), investing activity (IA), or financing activity (FA). The first transaction is entered as an example. Event No. AssetsLiab. Equity Rev. - Exp . - Net Inc.Cash Flow NA NA NA