Rosie Dry Cleaning was started on January 1, Year 1. It experienced the following events during its
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Question:
Rosie Dry Cleaning was started on January 1, Year 1. It experienced the following events during its first two years of operation:
Events Affecting Year 1
- Provided $25,470 of cleaning services on account.
- Collected $20,376 cash from accounts receivable.
- Adjusted the accounting records to reflect the estimate that uncollectible accounts expense would be 1 percent of the cleaning revenue on account.
Events Affecting Year 2
- Wrote off a $191 account receivable that was determined to be uncollectible.
- Provided $29,723 of cleaning services on account.
- Collected $26,305 cash from accounts receivable.
- Adjusted the accounting records to reflect the estimate that uncollectible accounts expense would be 1 percent of the cleaning revenue on account.
Required
- Organize the transaction data in accounts under an accounting equation for each year.
- 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.
- Determine the following amounts:
- (1) Net income for Year 2.
- (2) Net cash flow from operating activities for Year 2.
- (3) Balance of accounts receivable at the end of Year 2.
- (4) Net realizable value of accounts receivable at the end of Year 2.
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