Patel Service Company 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 Company earned $38,200 of cash revenue and $9,550 of revenue on account. Cash operating expenses were $29,547. After numerous attempts to collect a $258 account receivable from Sam Stephens, the account was determined to be uncollectible in Year 1. Required:

1. 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 (IA), or financing activity (FA). Use "NC" for net change in cash. Leave blank to indicate that an element is not affected by the event.
2. What amount of net income did Patel Service Company report on the Year 1 income statement?
3. Prepare the general journal entries for the four accounting events.

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