During the first year of operation, 2014, Clayton Repair Co. recognized $500,000 of service revenue on account. At the end of 2014, the accounts receivable balance was $72,000. For this first year in business, the owner believes uncollectible accounts expense will be about 1 percent of sales on account

Required

a.

What amount of cash did Clayton collect from accounts receivable during 2014?

b.

Assuming Clayton uses the allowance method to account for uncollectible accounts, what amount should Clayton record as uncollectible accounts expense for 2014?

c.

What is the net realizable value of receivables at the end of 2014?

d.

Show the effects of the events on the financial statements using a horizontal statements model like the following one. In the Cash Flow column, indicate whether the item is an operating activity (OA), an investing activity (IA), or a financing activity (FA). The letters NA indicate that an element is not affected by the event. (Enter any decreases to account balances and cash outflows with a minus sign.)