Ultra Day Spa provided $89,900 of services during Year 1. All customers paid for the services with credit cards. Ultra submitted the credit card receipts to the credit card company immediately. The credit card company paid Ultra cash in the amount of face value less a 2 percent service charge. Required a. Show the credit card sales (Event 1) and the subsequent collection of accounts receivable (Event 2) in 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). Leave blank to indicate that an element is not affected by the event. b. Based on this information alone, answer the following questions: (1) What is the amount of total assets at the end the accounting period? (2) What is the amount of revenue reported on the income statement? (3) What is the amount of cash flow from operating activities reported on the statement of cash flows?

FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
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Ultra Day Spa provided $89,900 of services during Year 1. All customers paid for the services with credit cards. Ultra submitted the
credit card receipts to the credit card company immediately. The credit card company paid Ultra cash in the amount of face value less
a 2 percent service charge.
Required
a. Show the credit card sales (Event 1) and the subsequent collection of accounts receivable (Event 2) in 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). Leave blank to indicate that an element is not affected by the event.
b. Based on this information alone, answer the following questions:
(1) What is the amount of total assets at the end of the accounting period?
(2) What is the amount of revenue reported on the income statement?
(3) What is the amount of cash flow from operating activities reported on the statement of cash flows?
Transcribed Image Text:Ultra Day Spa provided $89,900 of services during Year 1. All customers paid for the services with credit cards. Ultra submitted the credit card receipts to the credit card company immediately. The credit card company paid Ultra cash in the amount of face value less a 2 percent service charge. Required a. Show the credit card sales (Event 1) and the subsequent collection of accounts receivable (Event 2) in 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). Leave blank to indicate that an element is not affected by the event. b. Based on this information alone, answer the following questions: (1) What is the amount of total assets at the end of the accounting period? (2) What is the amount of revenue reported on the income statement? (3) What is the amount of cash flow from operating activities reported on the statement of cash flows?
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