Exercise 7-5A Analyzing financial statement effects of accounting for uncollectible accounts using the percent of revenue allowance method LO 7-1 Grover Inc. uses the allowance method to account for uncollectible accounts expense. Grover, Inc. experienced the following four accounting events in Year 1: 1. Recognized $83,000 of revenue on account. 2. Collected $77,000 cash from accounts receivable. 3. Wrote off uncollectible accounts of $1,250. 4. Recognized uncollectible accounts expense. Grover estimated that uncollectible accounts expense will be 3 percent of sales on account. Required a. Show the effect of each event on the elements of the financial statements, using a horizontal statements model like the one shown next. Use + for increase, - for decrease, and NA for not affected. In the cash flow column, indicate whether the item is an operating activity (OA), investing activity (IA), or financing activity (FA) or not affected (NA). The first transaction is entered as an example. b. Record the above transactions in general journal form. Complete this question by entering your answers in the tabs below. Required A Required B Show the effect of each event on the elements of the financial statements, using a horizontal statements model like the one show increase, for decrease, and NA for not affected. In the cash flow column, indicate whether the item is an operating activity (OA (IA), or financing activity (FA) or not affected (NA). The first transaction is entered as an example. Cash Flow Effect of Events on the Financial Statements Balance Sheet Income Statement Stockholders' Net Liabilities Revenue Expense = Equity Income NA + NA Event Assets 1. + + + NA 2. = = 3. = + + + 4. Required A Required B Required C What is the average days to collect the receivables? (Use 365 days in a year. Do not round intermediate calculations. Round your answers to the nearest whole number.) Company Average Collection Period days Market Supply days Required A Required B Required C Assuming both companies use the percent of receivables allowance method, what is the estimated percentage of uncollectible accounts for each company? (Round your percentage answers to nearest whole number.) Company Estimated Percentage of Uncollectible Accounts % % Market Supply