Exercise 7-4A (Algo) Effect of recognizing uncollectible accounts expense on financial statements: Percent of revenue allowance method LO 7-1 Rosie 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 $31,380 of cleaning services on account. 2. Collected $25,104 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 $235 account receivable that was determined to be uncollectible 2. Provided $36,620 of cleaning services on account 3. Collected $32,409 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) Net Income for Year 1 (2) Net cash flow from operating activities for Year 1 (3) Balance of accounts receivable at the end of Year 1 (4) Net realizable value of accounts receivable at the end of Year 1 c. Determine the following amounts: 141 MA IRAMA VAS c. Determine the following amounts: (1) Net income for Year 2. (2) Net cash flow from operating activities for Year 2. (3) Balance of accounts receivable at the end of Year 2. (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 Reg A2 ReqB Reqc Organize the transaction data in accounts under an accounting equation for Year 1. (Enter any decreases to account bal minus sign. Not all cells require input.) ROSIE DRY CLEANING Accounting Equation for Year 1 Balance Sheet Assets Liabilities Equity NRV + Accounts Retained Receivable Earnings Event Account Titles for Retained Earnings Cash 1. 2. + 3 + Bal. 0 + 0 0+ & Regal Req A2 > Red Organize the transaction data in accounts under an accounting equation for Year 2. (Enter any decreases to ac minus sign. Not all cells require input.) ROSIE DRY CLEANING Accounting Equation for Year 2 Balance Sheet Assets Liabilities Equity NRV Accounts + Retained Receivable Earnings Event Account Titles for Retained Earnings Cash + Bal. + + 1. T + 2. + IIIIII 3 + + + 4. + Bal. 0 + 0 0 + 0 Req A1 Reg A2 Req B ReqC Determine the following amounts for the Year 1 accounting period. (Round your answ Net income Net cash flow from operating activities Balance of accounts receivable Net realizable value of accounts receivable Complete this question by entering your answers in the tabs below. Req A1 Req A2 Req B Reg C Determine the following amounts for the Year 2 accounting period. (Round your Net income Net cash flow from operating activities Balance of accounts receivable Net realizable value of accounts receivable
