Grover Inc. uses the allowance method to account for uncollectible accounts expense. Grover Inc. experienced the following four accounting events in Year 1: 1. Recognized $92,000 of revenue on account. 2. Collected $78,000 cash from accounts receivable. 3. Wrote off uncollectible accounts of $720. 4. Recognized uncollectible accounts expense. Grover estimated that uncollectible accounts expense will be 1 percent of sales on account. Required Show the effect of each event on the elements of the financial statements, using a horizontal statements model like the one shown here. Use the following coding scheme to record your answers: increase is +, decrease is -, leave the cell blank for not affected. In the cash flow column, indicate whether the item is an operating activity (OA), investing activity (IA), or financing activity (FA). The first transaction is entered as an example. GROVER INC. Horizontal Statements Model Event No. Assets - Liabilities+ Equity Income Statement Cash Flow Retained Earnings Revenue Expense Net Income 1. %3D +. +t %3D 2. +/- OA %3D %3D %3D 3. %3D 4. %3D %3D

Grover Inc. uses the allowance method to account for uncollectible accounts expense. Grover Inc. experienced the following four accounting events in Year 1: 1. Recognized $92,000 of revenue on account. 2. Collected $78,000 cash from accounts receivable. 3. Wrote off uncollectible accounts of $720. 4. Recognized uncollectible accounts expense. Grover estimated that uncollectible accounts expense will be 1 percent of sales on account. Required Show the effect of each event on the elements of the financial statements, using a horizontal statements model like the one shown here. Use the following coding scheme to record your answers: increase is +, decrease is -, leave the cell blank for not affected. In the cash flow column, indicate whether the item is an operating activity (OA), investing activity (IA), or financing activity (FA). The first transaction is entered as an example. GROVER INC. Horizontal Statements Model Event No. Assets - Liabilities+ Equity Income Statement Cash Flow Retained Earnings Revenue Expense Net Income 1. %3D +. +t %3D 2. +/- OA %3D %3D %3D 3. %3D 4. %3D %3D

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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