Patel Service Company does make a few sales on account but is mostly a cash business. Consequently, it uses the direct write-offmethod to account for uncollectible accounts. During Year 1, Patel Service Company earned $36,050 of cash revenue and $9,013 ofrevenue on account. Cash operating expenses were $29,990. After numerous attempts to collect a $279 account receivable from SamStephens, the account was determined to be uncollectible in Year 1.Required:a. Show the effects of (1) cash revenue, (2) revenue on account, (3) cash expenses, and (4) write off of the uncollectible account on thefinancial statements using a horizontal statements model. In the Statement of Cash Flows column, indicate whether the item is anoperating activity (OA), investing activity (IA), or financing activity (FA).b. What amount of net income did Patel Service Company report on the Year 1 income statement?Complete this question by entering your answers in the tabs below.Required A Required BShow the effects of (1) cash revenue, (2) revenue on account, (3) cash expenses, and (4) write off of the uncollectible account on the financial statements using a horizontalstatements model.Note: Enter any decreases to account balances and cash outflows with a minus sign. For changes on the Statement of Cash Flows, indicate whether the item is an operating activity(OA), investing activity (IA), or financing activity (FA). Not all cells require input.Event1234BalanceCashAssetsNRV+ AccountsReceivable+++#Balance Sheet+11LiabilitiesPATEL SERVICE COMPANYHorizontal Statements Model+++Stockholders'EquityRevenueIncome Statement1TExpense E111111||Net IncomeStatement of CashFlowsShow less A Patel Service Company does make a few sales on account but is mostly a cash business. Consequently, it uses the direct write-offmethod to account for uncollectible accounts. During Year 1, Patel Service Company earned $36,050 of cash revenue and $9,013 ofrevenue on account. Cash operating expenses were $29,990. After numerous attempts to collect a $279 account receivable from SamStephens, the account was determined to be uncollectible in Year 1.Required:a. Show the effects of (1) cash revenue, (2) revenue on account, (3) cash expenses, and (4) write off of the uncollectible account on thefinancial statements using a horizontal statements model. In the Statement of Cash Flows column, indicate whether the item is anoperating activity (OA), investing activity (IA), or financing activity (FA).b. What amount of net income did Patel Service Company report on the Year 1 income statement?Complete this question by entering your answers in the tabs below.Required ARequired BWhat amount of net income did Patel Service Company report on the Year 1 income statement?Net income< Required ARequired 3>

When a company follows direct written off uncollectible receivables principal, the company records…

Patel Service Company does make a few sales on account but is mostly a cash business. Consequently, it uses the direct write-off method to account for uncollectible accounts. During Year 1, Patel Service Company earned $36,050 of cash revenue and $9,013 of revenue on account. Cash operating expenses were $29,990. After numerous attempts to collect a $279 account receivable from Sam Stephens, the account was determined to be uncollectible in Year 1. Required: a. Show the effects of (1) cash revenue, (2) revenue on account, (3) cash expenses, and (4) write off of the uncollectible account on the financial statements using a horizontal statements model. In the Statement of Cash Flows column, indicate whether the item is an operating activity (OA), investing activity (IA), or financing activity (FA). b. What amount of net income did Patel Service Company report on the Year 1 income statement?

Patel Service Company does make a few sales on account but is mostly a cash business. Consequently, it uses the direct write-off method to account for uncollectible accounts. During Year 1, Patel Service Company earned $36,050 of cash revenue and $9,013 of revenue on account. Cash operating expenses were $29,990. After numerous attempts to collect a $279 account receivable from Sam Stephens, the account was determined to be uncollectible in Year 1. Required: a. Show the effects of (1) cash revenue, (2) revenue on account, (3) cash expenses, and (4) write off of the uncollectible account on the financial statements using a horizontal statements model. In the Statement of Cash Flows column, indicate whether the item is an operating activity (OA), investing activity (IA), or financing activity (FA). b. What amount of net income did Patel Service Company report on the Year 1 income statement?

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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Concept explainers

Bad Debts

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.

Question

100%

Patel Service Company does make a few sales on account but is mostly a cash business. Consequently, it uses the direct write-off
method to account for uncollectible accounts. During Year 1, Patel Service Company earned $36,050 of cash revenue and $9,013 of
revenue on account. Cash operating expenses were $29,990. After numerous attempts to collect a $279 account receivable from Sam
Stephens, the account was determined to be uncollectible in Year 1.
Required:
a. Show the effects of (1) cash revenue, (2) revenue on account, (3) cash expenses, and (4) write off of the uncollectible account on the
financial statements using a horizontal statements model. In the Statement of Cash Flows column, indicate whether the item is an
operating activity (OA), investing activity (IA), or financing activity (FA).
b. What amount of net income did Patel Service Company report on the Year 1 income statement?
Complete this question by entering your answers in the tabs below.
Required A Required B
Show the effects of (1) cash revenue, (2) revenue on account, (3) cash expenses, and (4) write off of the uncollectible account on the financial statements using a horizontal
statements model.
Note: Enter any decreases to account balances and cash outflows with a minus sign. For changes on the Statement of Cash Flows, indicate whether the item is an operating activity
(OA), investing activity (IA), or financing activity (FA). Not all cells require input.
Event
1
2
3
4
Balance
Cash
Assets
NRV
+ Accounts
Receivable
+
+
+
#
Balance Sheet
+
11
Liabilities
PATEL SERVICE COMPANY
Horizontal Statements Model
+
+
+
Stockholders'
Equity
Revenue
Income Statement
1
T
Expense E
11
11
11
||
Net Income
Statement of Cash
Flows
Show less A

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