Recording receivables and identifying their effect on financial statementsWong Company per...

Recording receivables and identifying their effect on financial statements

Wong Company performed services on account for $60,000 in 2011, its first year of operations. Wong collected $48,000 cash from accounts receivable during 2011 and the remaining $12,000 in cash during 2012.

Required

a. Record the 2011 transactions in T-accounts.

b. Record the 2011 transactions in a horizontal statements model like the following one:

c. Determine the amount of revenue Wong would report on the 2011 income statement.

d. Determine the amount of cash flow from operating activities Wong would report on the 2011 statement of cash flows.

e. Open a T-account for Retained Earnings, and close the 2011 Service Revenue account to the Retained Earnings account.

f. Record the 2012 cash collection in the appropriate T-accounts.

g. Record the 2012 transaction in a horizontal statements model like the one shown in Requirement b.

h. Assuming no other transactions occur in 2012, determine the amount of net income and the net cash flow from operating activities for 2012.