Businesses using the allowance method for the recognition of uncollectible accounts expense commonly
experience four accounting events:
1. Recognition of uncollectible accounts expense through a year-end adjusting entry.
2. Write-off of uncollectible accounts.
3. Recognition of revenue on account.
4. Collection of cash from accounts receivable.
Required
Show the effect of each event on the elements of the financial statements, using a horizontal statements
model like the one shown here. Use the following coding scheme to record your answers: increase is +,
decrease is −, not affected is NA. In the cash flow column, indicate whether the item is an operating activity (OA), investing activity (IA), or financing activity (FA). The first transaction is entered as an
example.

Transcribed Image Text:

Balance Sheet Income Statement Statement of Assets = Llab. + Stk. Equity Event Cash Flows No. Rev. Exp. Net Inc. NA NA NA +