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Businesses using the allowance method for the recognition of uncollectible accounts expense commonly experience four accounting events: a. Recognition of uncollectible accounts expense through a
Businesses using the allowance method for the recognition of uncollectible accounts expense commonly experience four accounting events: a. Recognition of uncollectible accounts expense through a year-end adjusting entry. b. Write-off of uncollectible accounts. c. Recognition of revenue on account. d. Collection of cash from accounts receivable. Required Show the effect of each event on the elements of the financial statements, using a horizontal statements model like the one shown here. Use the following coding scheme to record your answers: increase is +, decrease is -, leave the cell blank 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. Effect of Events on the Financial Statements Balance Sheet Income Statement Stockholders' Net Liabilities Revenue - Expense = Equity Income Event Assets Cash Flow 1 + + - 2. + = 3 + = 4
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