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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
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 $27,010 of cleaning services on account.
- Collected $21,608 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 $203 account receivable that was determined to be uncollectible.
- Provided $31,521 of cleaning services on account.
- Collected $27,896 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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