Exercise 7-4A 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 $33,240 of cleaning services on account 2. Collected $26,592 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 $249 account receivable that was determined to be uncollectible. 2. Provided $38,791 of cleaning services on account 3. Collected $34,330 cash from accounts receivable. 4. Adjusted the accounting records to reflect the estimate that uncollectible accounts expense would be percent of the cleaning revenue on account. 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 Woo Complete this question by entering your answers in the tabs below. Reg A1 Reg A2 Req B Reqc Organize the transaction data in accounts under an accounting equation for Year 1. (Enter any decreases to account balances with a minus sign. Not all cells in the "Accounts Titles for Retained Earnings" column may require an input - leave cells blank if there is no corresponding Retained Earnings input needed.) ROSIE DRY CLEANING Complete this question by entering your answers in the tabs below. Req Al Reg A2 Red B Rega Organize the transaction data in accounts under an accounting equation for Year 1. (Enter any decreases to account balances with a minus sign. Not all cells in the "Accounts Titles for Retained Earnings" column may require an input - leave cells blank if there is no corresponding Retained Earnings input needed.) Titles for R Accounts Earnings ROSIE DRY CLEANING Accounting Equation for the Year 1 Balance Sheet Event Assets Equity Cash + Accounts Allowance Retained Receivable Earnings 1. 1 2. 3. Bal. OLEO- LO. LT Complete this question by entering your answers in the tabs below. Reg A1 Req A2 Reg B Regc Organize the transaction data in accounts under an accounting equation for Year 2. (Enter any decreases to account balances with minus sign. Not all cells in the "Accounts Titles for Retained Earnings column may require an input - leave cells blank if there is no corresponding Retained Earnings input needed.) ROSIE DRY CLEANING Accounting Equation for the Year 2 Balance Sheet Assets Equity Accounts Titles for Retained Earnings = Accounts Retained Allowance Earnings Receivable Event Cash R 0 + 0 Complete this question by entering your answers in the tabs below. Req A1 Reg A2 ROB Reqc Determine the following amounts for the Year 1 accounting period. (Round your answers to nearest whole dollar amount.) Not incomo Not cash flow from operating activities Balance of accounts receivable Not realizable value of accounts receivable Complete this question by entering your answers in the tabs below. Req A1 Reg A2 1 Regc Determine the following amounts for the Year 2 accounting period. (Round your answers to nearest whole dollar amount.) Net income Net cash flow from operating activities Balance of accounts receivable Net realizable value of accounts receivable
