Grover Incorporated uses the allowance method to account for uncollectible accounts expense. Grover Incorporated experienced the following four accounting events in Year 1: 1. Recognized $85,000 of revenue on account. 2. Collected $79,000 cash from accounts receivable. 3. Wrote off uncollectible accounts of $1,350. 4. Recognized uncollectible accounts expense. Grover estimated that uncollectible accounts expense will be 3 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. Use + for increase, for decrease, and blank for not affected. In the Statement of Cash Flows column, indicate whether the item is an operating activity (CA), investing activity (IA), financing activity (FA), or not affected (blank). The first transaction is entered as an example. b. Record the previous transactions in general journal form.
Grover Incorporated uses the allowance method to account for uncollectible accounts expense. Grover Incorporated experienced the following four accounting events in Year 1: 1. Recognized $85,000 of revenue on account. 2. Collected $79,000 cash from accounts receivable. 3. Wrote off uncollectible accounts of $1,350. 4. Recognized uncollectible accounts expense. Grover estimated that uncollectible accounts expense will be 3 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. Use + for increase, for decrease, and blank for not affected. In the Statement of Cash Flows column, indicate whether the item is an operating activity (CA), investing activity (IA), financing activity (FA), or not affected (blank). The first transaction is entered as an example. b. Record the previous transactions in general journal form.
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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At the end of the accounting period, a financial statement is prepared by every company, then at that time while preparing the financial statement, the company determines among its total receivable amount how much portion of receivables is collected by the company during that accounting period.
Accounts Receivable
The word “account receivable” means the payment is yet to be made for the work that is already done. Generally, each and every business sells its goods and services either in cash or in credit. So, when the goods are sold on credit account receivable arise which means the company is going to get the payment from its customer to whom the goods are sold on credit. Usually, the credit period may be for a very short period of time and in some rare cases it takes a year.
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Transcribed Image Text:Grover Incorporated uses the allowance method to account for uncollectible accounts expense. Grover Incorporated experienced the
following four accounting events in Year 1:
1. Recognized $85,000 of revenue on account.
2. Collected $79,000 cash from accounts receivable.
3. Wrote off uncollectible accounts of $1,350.
4. Recognized uncollectible accounts expense. Grover estimated that uncollectible accounts expense will be 3 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. Use + for increase,
for decrease, and blank for not affected. In the Statement of Cash Flows column, indicate whether the item is an operating activity
(CA), investing activity (IA), financing activity (FA), or not affected (blank). The first transaction is entered as an example.
b. Record the previous transactions in general journal form.
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