During the first year of operation, Year 1, Direct Service Co. recognized $382,000 of service revenue on account. At the end of Year 1, the accounts receivable balance was $75,092. For this first year in business, the owner believes uncollectible accounts expense will be about 7 percent of sales on account. e. Show the effects of the transactions listed in Requirement c on the financial statements by recording the appropriate amounts in a horizontal statements model like the one shown next. When you record amounts in the Cash Flow column, indicate whether the item is an operating activity (OA), investing activity (IA), or financing activity (FA). The letters NA indicate that an element is not affected by the event.

(Enter any decreases to account balances with a minus sign.)

DIRECT SERVICE COMPANY

Effect of Events on the Financial Statements for Year 1

Event

Assets

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Liabilities

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Equity

Revenue

Expenses

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Net Income

Cash Flows

Cash

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Accounts Receivable

Allowances

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Retained Earnings

1.

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2.

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3.

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Totals

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