Patel Service Company does make a few sales on account but is mostly a cash business.
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 $33,600 of cash revenue and $8,400 of revenue on account. Cash operating expenses were $27,786. After numerous attempts to collect a $287 account receivable from Sam Stephens, the account was determined to be uncollectible in Year 1.
Required:
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.
What amount of net income did Patel Service Company report on the Year 1 income statement?
Prepare the general journal entries for the four accounting events.
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Patel Service Company does make a few sales on account but is mostly a cash business.
Patel Service Co. does make a few sales on account but is mostly a cash business....
Patel Service Co. 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 Co. earned $37,650 of cash revenue and $9,413 of revenue on account. Cash operating expenses were $23,652. After numerous attempts to collect a $286 account receivable from Sam Stephens, the account was determined to be uncollectible in Year 1. Required: a. Show the effects of (1) cash...
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Grover Inc. uses the allowance method to account for
uncollectible accounts expense. Grover Inc. experienced the
following four accounting events in Year 1:
Recognized $92,000 of revenue on account.
Collected $78,000 cash from accounts receivable.
Wrote off uncollectible accounts of $720.
Recognized uncollectible accounts expense. Grover estimated
that uncollectible accounts expense will be 1 percent of sales on
account.
Required
a. Show the effect of each event on the elements
of the financial statements, using a horizontal statements model
like...
Troy Company earned $15,000 of cash revenue. Troy incurred
$12,000 of utility expense on account during Year 1. The company
made cash payments of $8,000 to reduce its accounts payable during
Year 1.
Required
Show the effects of the events on the financial statements
using a horizontal financial statements model like the following
one. In the Cash Flow column, use OA to designate operating
activity, IA for investment activity, FA for financing activity, NC
for net change in cash and...
During the first year of operation, 2018, Direct Service Co. recognized $350,000 of service revenue on account. At the end of 2018, the accounts receivable balance was $63,000. For this first year in business, the owner believes uncollectible accounts expense will be about 3 percent of sales on account. Required a. What amount of cash did Direct Service collect from accounts receivable during 2018? b. Assuming Direct Service uses the allowance method to account for uncollectible accounts, what amount should...
The following transactions apply to Jova Company for Year 1, the first year of operation: 1. Issued $10,500 of common stock for cash. 2. Recognized $65,500 of service revenue earned on account. 3. Collected $58,400 from accounts receivable. 4. Paid operating expenses of $35,000 9. Adjusted accounts to recognize uncollectible accounts expense. Jova uses the allowance method of accounting for uncollectible accounts and estimates that uncollectible accounts expense will be 2 percent of sales on account. The following transactions apply...
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