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 $33,530 of cleaning services on account 2. Collected $26,824 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 $251 account receivable that was determined to be uncollectible. 2. Provided $39,130 of cleaning services on account. 3. Collected $34,630 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 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 Reg A2 Req B Reqc Organize the transaction data in accounts under an accounting equation for Year 1. (Enter any decreases to acco with a minus sign. Not all cells in the "Accounts Titles for Retained Earnings" column may require an input - leave there is no corresponding Retained Earnings input needed.) ROSIE DRY CLEANING Accounting Equation for the Year 1 Balance Sheet Event Assets Equity Accounts Titles for Retained Cash Accounts Earnings Allowance Retained Receivable Earnings 1 2 + + + 1111 1111111 3. Bal. + Req A2 > Regal Req A2 ReqB Reqc Organize the transaction data in accounts under an accounting equation for Year 2. (Enter any decreases to accou minus sign. Not all cells in the "Accounts Titles for Retained Earnings" column may require an input - leave cells b 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 Receivable Earnings Event Cash Bal 2 3 HII 4 Bal Complete this question by entering your answers in the tabs below. Req A1 Reg A2 Req B Reg C Determine the following amounts for the Year 1 accounting period. (Round your answer 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. Reg A1 Req A2 Req B ReqC Determine the following amounts for the Year 2 accounting period. (Round your ans Net income Net cash flow from operating activities Balance of accounts receivable Net realizable value of accounts receivable
