Exercise 7-4B Effect of recognizing uncollectible accounts expense on financial statements: percent of revenue allowance method Reliable Auto Service was started on January I. Year 1. The company experienced the following events during its first two years of operation: Events Affecting Year 1 1. Provided $52,000 of repair services on account. 2. Collected $32,000 cash from accounts receivable. 3. Adjusted the accounting records to reflect the estimate that uncollectible accounts expense would be 2 percent of the service revenue on account. Events Affecting Year 2 1. Wrote off a $320 account receivable that was determined to be uncollectible. 2. Provided $65,000 of repair services on account. 3. Collected $66,000 cash from accounts receivable. 4. Adjusted the accounting records to reflect the estimate that uncollectible accounts expense would be 1 percent of the service revenue on account. Required a. Organize the transaction data in accounts under an accounting equation. 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. Repeat Requirements a and b for the Year 2 accounting period. b. (1) Net Income for Year 1: (2) Net Cash Flow from Operating Activities: (3) Balance of Accounts Receivable, 12/31/Year 1: (4) Net Realizable Value of Accounts Receivable, 12/31/Year 1: c. (1) Net Income for Year 2: (2) Net Cash Flow from Operating Activities: (3) Balance of Accounts Receivable, 12/31/Year 2: (4) Net Realizable Value of Accounts Receivable, 12/31/Year 2