Question

Ultra Day Spa provided $91,050 of services during 2016. All customers paid for the services with credit cards. Ultra submitted the credit card receipts to the credit card company immediately. The credit card company paid Ultra cash in the amount of face value less a 1.50 percent service charge Required Record the credit card sales (Event 1) and the subsequent collection of accounts receivable (Event 2) in a horizontal statements model like the one shown here. In the Cash Flow column, indicate whether the item is an operating activity (OA), investing activity (IA), or financing activity (FA). Use NA to indicate that an element is not affected by the event. (Enter any decreases to account balances with a minus sign. Round your answers to nearest whole dollar.) Balance Sheet Assets Liab Liab + Acct. Rec. ULTRA DAY SPA Horizontal Statements Model Income Statement E Equity quity Ret. Ear. Revenue - Expense = Net Income Event Cash Cash Flows AAAAAA b-1. What is the amount of total assets at the end of the accounting period? (Round your answer to nearest whole dollar.) Total assets

Answer 1

Answers

• All working forms part of the answer
• Cash received = Total revenue – (1.5% of total revenue)

= $ 91,050 – (91050 x 1.5%)
= 91050 – 1365.75
= $ 89,684.25
= $ 89,684

• Requirement ‘a’

Event	Cash	Accounts receivables	Liabilities	Equity /Retained Earnings	Rev	Expense	Net Income	Cash Flows
1	$                       -	$       91,050.00	$                               -	$                91,050.00	$          91,050.00	$                            -	$    91,050.00	$                           -
2	$        89,684.00	$     (91,050.00)	$                               -	$                (1,366.00)	$                         -	$               1,366.00	$    (1,366.00)	$            89,684.00 (Operating Activities)

• Other answers

----Answer b1: Total Assets = Cash + Accounts receivables = 89684 + 0 = $ 89,684

---Answer b2: Revenue to be reported = $ 91,050

---Answer b3: Amount of cash flow from Operating activities = $ 89,684