Exercise 7-9A (Algo) Accounting for uncollectible accounts: direct write-off method LO 7-4 Patel Service Co. does make a few sales on account but is mostly a cash business. Consequently, it uses the direct write-off method to account for uncollectible accounts. During Year 1, Patel Service Co. earned $33,650 of cash revenue and $8,413 of revenue on account Cash operating expenses were $27170. After numerous attempts to collect a $280 account receivable from Sam Stephens, the account was determined to be uncollectible in Year 1. Required: a. Show the effects of (1) cash revenue, (2) revenue on account, (3) cash expenses, and (4) write off of the uncollectible account on the financial statements using a horizontal statements model. In the Statement of Cash Flows column, indicate whether the item is an operating activity (OA), investing activity (A), or financing activity (FA). b. What amount of net income did Patel Service Co. report on the Year 1 income statement? Required A Required B Show the effects of (1) cash revenue, (2) revenue on account, (3) cash expenses, and (4) write off of the uncollectible account on the financial sti statements model. (Enter any decreases to account balances and cash outflows with a minus sign. For changes on the statement of Cash Flows, an operating activity (OA), investing activity (IA), or financing activity (FA). Not all cells require input.) PATEL SERVICE CO. Horizontal Statements Model Income Statement Balance Sheet Assets Statement of Cash Flows Event Stockholders Equity Liabilities Revenue Expense Not Income Cash NRV Accounts Receivable 1 2 3 4 Bal 0 0 Seved Help Say Thapter 7 Homework d. now use enes Laevenue, 14) Fevenue ull LLULIIL, Last Expenses, diru 17 WILE UNUI e un ELULIT. financial statements using a horizontal statements model. In the Statement of Cash Flows column, indicate whether the L operating activity (OA), investing activity (IA), or financing activity (FA). b. What amount of net income did Patel Service Co. report on the Year 1 income statement? Complete this question by entering your answers in the tabs below. Required A Required B What amount of net Income did Patel Service cho report on the Year 1 Income statement? Net income