Grover Incorporated uses the allowance method to account for uncollectible accounts expense. Grover Incorporated experienced the following four accounting events in Year 1:

Recognized $80,000 of revenue on account.

Collected $74,000 cash from accounts receivable.

Wrote off uncollectible accounts of $1,100.

Recognized uncollectible accounts expense. Grover estimated that uncollectible accounts expense will be 2 percent of sales on account.

Required

Show the effect of each event on the elements of the financial statements, using a horizontal statements model. Use + for increase, for decrease, and blank for not affected. In the Statement of Cash Flows column, indicate whether the item is an operating activity (OA), investing activity (IA), financing activity (FA), or not affected (blank). The first transaction is entered as an example.

Record the previous transactions in general journal form.

Show the effect of each event on the elements of the financial statements, using a horizontal statements model. Use + for increase, for decrease, and blank for not affected. In the Statement of Cash Flows column, indicate whether the item is an operating activity (OA), investing activity (IA), financing activity (FA), or not affected (blank). The first transaction is entered as an example.

Required A:

Effect of Events on the Financial Statements

Horizontal Statements Model

Balance Sheet

Income Statement

Statement of Cash Flows

Event

Assets

=

Liabilities

+

Stockholders Equity

Revenue

Expense

=

Net Income

Retained Earnings

1.

+

=

+

+

+

=

+

2.

=

+

=

3.

=

+

=

4.

=

+

=

Required B:

Record the previous transactions in general journal form. (If no entry is required for a transaction/event, select "No journal entry required" in the first account field

Transaction	General Journal	Debit	Credit
1