Businesses using the allowance method for the recognition of uncollectible accounts expense commonly experience four accounting events: 1. Recognition of uncollectible accounts expense through a year-end adjusting entry 2. Write-off of uncollectible accounts 3. Recognition of revenue on account. 4. 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 , not affected is NA. In the cash flow column, indicate whether the item is an operating activity (OA), investing activity (IA), or financing activity (FA) or not affected (NA). The first transaction is entered as an example. Effect of Events on the Financial Statements Balance Sheet Income Statement Stockholders' + Net Event Assets Liabilities Revenue Expense Cash Flow Equity Income NA 1 NA NA + 2 + + 4 + Vulcan Service Co. experienced the following transactions for 2016, its first year of operations: 1.Provided $91,000 of services on account 2. Collected $72,000 cash from accounts receivable. 3. Paid $36,000 of salaries expense for the year 4. Adjusted the accounts using the following information from an accounts receivable aging schedule: Number of Days Past Due Current 0-30 Percent Likely to Be Uncollectible Allowance Balance Amount $7,800 4,500 2,000 2,200 2,500 01 05 10 20 50 31-60 61-90 Over 90 days Required a. Record the above transactions in general journal form and post to T-accounts. (If no entry is required for a transaction/event, select "No journal entry required" in the first account field.) View transaction list Journal entry worksheet 1 2 3 4 Provided $91,000 of services on account. Note: Enter debits before credits. Transaction General Journal Debit Credit 1 Clear entry Record entry View general journal A Cash Service Revenue Beg. Bal Beg. Bal. End. Bal End. Bal Accounts Receivable Salaries Expense Beg. Bal. Beg. Bal End. Bal End. Bal. Uncollectible Acctounts Expense Allowance for Doubtful Accounts Beg. Bal Beg. Bal. End. Bal End. Bal. b. Prepare the income statement for Vulcan Service Co. for 2016 VULCAN SERVICE CO. Income Statement For the Year Ended December 31, 2016 Operating expenses Total Operating Expenses c. What is the net realizable value of the accounts receivable at December 31, 2016? Net Realizable Value Rainey Enterprises loaned $20,000 to Small Co. on June 1, 2016, for one year at 6 percent interest. Required a.Record these general joumal entries for Rainey Enterprises: (If no entry is required for a transaction/event, select "No journal entry required" in the first account field.) (1) The loan to Small Co. (2) The adjusting entry at December 31, 2016. (3) The adjusting entry and collection of the note on June 1, 2017. View transaction list Journal entry worksheet 1 2 3 4 Record entry for loan provided to small Co. for one year at 6 percent interest. Note: Enter debits before credits. General Journal Debit Date Credit 06/01/2016 View general journal Record entry Clear entry b. Show the effects of the three above transactions in a horizontal statements model like the one shown below. (In the Cash Flow column, use the initials OA to designate operating activity, IA for investing activity, FA for financing activity and NA to indicate the element is not affected by the event. Enter any decreases to account balances with a minus sign.) Income Statement Balance Sheet Assets Liab. Equity Net Income Event Cash Note Rec. Int. Rec. Ret. Ear. Revenue Expense Cash Flows + 6/1/16 12/31/16 6/1/17 6/1/17 Businesses using the allowance method for the recognition of uncollectible accounts expense commonly experience four accounting events: 1. Recognition of uncollectible accounts expense through a year-end adjusting entry 2. Write-off of uncollectible accounts 3. Recognition of revenue on account. 4. 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 , not affected is NA. In the cash flow column, indicate whether the item is an operating activity (OA), investing activity (IA), or financing activity (FA) or not affected (NA). The first transaction is entered as an example. Effect of Events on the Financial Statements Balance Sheet Income Statement Stockholders' + Net Event Assets Liabilities Revenue Expense Cash Flow Equity Income NA 1 NA NA + 2 + + 4 + Vulcan Service Co. experienced the following transactions for 2016, its first year of operations: 1.Provided $91,000 of services on account 2. Collected $72,000 cash from accounts receivable. 3. Paid $36,000 of salaries expense for the year 4. Adjusted the accounts using the following information from an accounts receivable aging schedule: Number of Days Past Due Current 0-30 Percent Likely to Be Uncollectible Allowance Balance Amount $7,800 4,500 2,000 2,200 2,500 01 05 10 20 50 31-60 61-90 Over 90 days Required a. Record the above transactions in general journal form and post to T-accounts. (If no entry is required for a transaction/event, select "No journal entry required" in the first account field.) View transaction list Journal entry worksheet 1 2 3 4 Provided $91,000 of services on account. Note: Enter debits before credits. Transaction General Journal Debit Credit 1 Clear entry Record entry View general journal A Cash Service Revenue Beg. Bal Beg. Bal. End. Bal End. Bal Accounts Receivable Salaries Expense Beg. Bal. Beg. Bal End. Bal End. Bal. Uncollectible Acctounts Expense Allowance for Doubtful Accounts Beg. Bal Beg. Bal. End. Bal End. Bal. b. Prepare the income statement for Vulcan Service Co. for 2016 VULCAN SERVICE CO. Income Statement For the Year Ended December 31, 2016 Operating expenses Total Operating Expenses c. What is the net realizable value of the accounts receivable at December 31, 2016? Net Realizable Value Rainey Enterprises loaned $20,000 to Small Co. on June 1, 2016, for one year at 6 percent interest. Required a.Record these general joumal entries for Rainey Enterprises: (If no entry is required for a transaction/event, select "No journal entry required" in the first account field.) (1) The loan to Small Co. (2) The adjusting entry at December 31, 2016. (3) The adjusting entry and collection of the note on June 1, 2017. View transaction list Journal entry worksheet 1 2 3 4 Record entry for loan provided to small Co. for one year at 6 percent interest. Note: Enter debits before credits. General Journal Debit Date Credit 06/01/2016 View general journal Record entry Clear entry b. Show the effects of the three above transactions in a horizontal statements model like the one shown below. (In the Cash Flow column, use the initials OA to designate operating activity, IA for investing activity, FA for financing activity and NA to indicate the element is not affected by the event. Enter any decreases to account balances with a minus sign.) Income Statement Balance Sheet Assets Liab. Equity Net Income Event Cash Note Rec. Int. Rec. Ret. Ear. Revenue Expense Cash Flows + 6/1/16 12/31/16 6/1/17 6/1/17