Exercise 5-4A (Algo) Effect of recognizing uncollectible accounts expense on financial statements: Percent of revenue allowance method LO 5-1 Rosle Dry Cleaning was started on January 1, Year 1. It experienced the following events during its first two years of operation: Events Affecting Year 1 1. Provided $32,880 of cleaning services on account. 2. Collected $26,304 cash from accounts receivable. 3. Adjusted the accounting records to reflect the estimate that uncollectible accounts expense would be 1 percent of the cleaning revenue on account. Events Affecting Year 2 1. Wrote off a $247 account receivable that was determined to be uncollectible. 2. Provided $38,371 of cleaning services on account. 3. Collected $33.958 cash from accounts receivable. 4. Adjusted the accounting records to reflect the estimate that uncollectible accounts expense would be 1 percent of the cleaning revenue on account. Required a. Organize the transaction data in accounts under an accounting equation for each year. b. Determine the following amounts: 1. (1) Net Income for Year 1. 2. (2) Net cash flow from operating activities for Year 1. 3. (3) Balance of accounts receivable at the end of Year 1. 4. (4) Net realizable value of accounts receivable at the end of Year 1. c. Determine the following amounts: 1. (1) Net Income for Year 2. 2. (2) Net cash flow from operating activities for Year 2. 3. (3) Balance of accounts receivable at the end of Year 2. 4. (4) Net realizable value of accounts receivable at the end of Year 2. Complete this question by entering your answers in the tabs below. Req A1 Req A2 Req B Req C Organize the transaction data in accounts under an accounting equation for year 1. (Enter any decreases to account balances with a minus sign. If there is no effect on the Accounts Titles for Retained Earnings, leave the cell blank. Not all cells will require entry. Round your answers to the nearest whole dollar.) ROSIE DRY CLEANING Accounting Equation for the Year 1 Balance Sheet Assets Event NRV Accounts Equity Retained Accounts Titles for Retained Earnings Cash + Receivable Earnings 1. + 2. 26,304+ 32,880 (28,304)= 3. = 32,880 Service revenue Uncollectible accounts expense Bal. 26,304+ 6,576 32,880 < Req A1 Req A2 >