Accounting for bad debts: allowance method
Nina’s Accounting Service began operation on January 1, 2012. The company experienced the following events for its first year of operations.
Events Affecting 2012:
1.Provided $120,000 of accounting services on account.
2.Collected $90,000 cash from accounts receivable.
3.Paid salaries of $24,000 for the year.
4.Adjusted the accounts to reflect management’s expectations that uncollectible accounts expense would be $1,200.
Required
a.Organize the transaction data in accounts under on accounting equation.
b.Prepare an income statement, a balance sheet, and a statement of cash flows for 2012.
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