Exercise 7-4A Effect of recognizing uncollectible accounts expense on financial statements: percent of revenue allowance method Rosie Dry Cleaning was started on January 1, Year 1. It experienced the following events during its first two years of operation. Events Affecting Year 1 1. Provided $45,000 of cleaning services on account. 2. Collected $39,000 cash from accounts receivable. 3. Adjusted the accounting records to reflect the estimate that uncollectible accounts expense would be 1 percent of the cleaning revenue on account. Events Affecting Year 2 1. Wrote off a $300 account receivable that was determined to be uncollectible. 2. Provided $62,000 of cleaning services on account. 3. Collected $61,000 cash from accounts receivable. 4. Adjusted the accounting records to reflect the estimate that uncollectible accounts expense would be 1 percent of the cleaning revenue on account. Required a. Record the events for Year 1 in T-accounts. b. Determine the following amounts:
Exercise 7-4A Effect of recognizing uncollectible accounts expense on financial statements: percent of revenue allowance method Rosie Dry Cleaning was started on January 1, Year 1. It experienced the following events during its first two years of operation. Events Affecting Year 1 1. Provided $45,000 of cleaning services on account. 2. Collected $39,000 cash from accounts receivable. 3. Adjusted the accounting records to reflect the estimate that uncollectible accounts expense would be 1 percent of the cleaning revenue on account. Events Affecting Year 2 1. Wrote off a $300 account receivable that was determined to be uncollectible. 2. Provided $62,000 of cleaning services on account. 3. Collected $61,000 cash from accounts receivable. 4. Adjusted the accounting records to reflect the estimate that uncollectible accounts expense would be 1 percent of the cleaning revenue on account. Required a. Record the events for Year 1 in T-accounts. b. Determine the following amounts:
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Transcribed Image Text:Exercise 7-4A Effect of recognizing uncollectible accounts expense on financial statements: percent of revenue allowance method
Rosie Dry Cleaning was started on January 1, Year 1. It experienced the following events during its first two years of operation.
Events Affecting Year 1
1. Provided $45,000 of cleaning services on account.
2. Collected $39,000 cash from accounts receivable.
3. Adjusted the accounting records to reflect the estimate that uncollectible accounts expense would be 1 percent of the cleaning revenue
on account.
Events Affecting Year 2
1. Wrote off a $300 account receivable that was determined to be uncollectible.
2. Provided $62,000 of cleaning services on account.
3. Collected $61,000 cash from accounts receivable.
4. Adjusted the accounting records to reflect the estimate that uncollectible accounts expense would be 1 percent of the cleaning revenue
on account.
Required
a. Record the events for Year 1 in T-accounts.
b. Determine the following amounts:
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