Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

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

image text in transcribed
image text in transcribed
image text in transcribed
image text in transcribed
image text in transcribed
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 $31,690 of cleaning services on account 2. Collected $25,352 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 $238 account recelvable that was determined to be uncollectible. 2. Provided $36,982 of cleaning services on account. 3. Collected $32.729 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: (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. Organize the transaction data in accounts under an accounting equation for Year 1. Note: Enter any decreases to account balances with a minus sign. Not all cells require inpu Organize the transaction data in accounts under an accounting equation for Year 2. Note: Enter any decreases to account balances with a minus sign. Not all cells require inpu Determine the following amounts for the Year 1 accounting period. Note: Round your answers to nearest whole dollar amount. Determine the following amounts for the Year 2 accounting period. Note: Round your answers to nearest whole dollar amount

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image

Step: 3

blur-text-image

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

Contemporary Auditing Real Issues And Cases

Authors: Michael Chris Knapp

9th International Edition

1133187900, 978-1133187905

More Books

Students also viewed these Accounting questions

Question

What role does project size (cost) play in the classifications?

Answered: 1 week ago

Question

List the advantages and disadvantages of the pay programs. page 505

Answered: 1 week ago