Recording and identifying their effect on financial statements Davos company per

Question

Recording and identifying their effect on financial statements Davos company performed services on account for $160,000in; 2016, and the remaining $40,000 was collected in cash during 2017. Required Record the 2016 transactions in T-accounts. Record the 2016 transactions in a horizontal statements model like the following one: Determine the amount of revenue Davos would report on the 2016 income statement. Determine the amount of cash follow from operating activities Davos would report on the 2016 statement of cash flows. Open a T-account for Retained Earnings, and close the 2016 Service Revenue account to the Retained learning's account. Record the 2017 cash collection in the appropriate T-accounts. R. Record the 2017 transaction in a horizontal statements model like the one shown in Requirement b. Assuming no other transactions occur in 2017. determine the amount of net income and the net cash How from operating activities for 2017.

Explanation / Answer

T- Accounts for transactions Revenue A/c Particulars Debit Particulars Credit Revenue $160,000 Cah A/c Particulars Debit Particulars Credit To Accounts Receivable $120,000 Accounts Receivble A/c Particulars Debit Particulars Credit To Revenue $40,000 Assets = Liability   + Equity Cash + Accounts Receivable = Ret.Earn 160000 (120000+40000) Revenue - Expenses = Net Income Cash Flow $160,000 = $160,000 $160,000 (1600000-0) Total Revenue Davos would Report in Income statement for 2016 $160,000 Total Cash flow from the Operating Activities , Davos would Report in Income statement for 2016 $160,000 Cash Collection of accounts Receivable in 2017 Cash A/c Particulars Debit Particulars Credit To Accounts Receivable $40,000 Accounts Receivble A/c Particulars Debit Particulars Credit To Cash $40,000 Assets = Liability   + Equity Cash + Accounts Receivable = 40000 Ret.Earn 40000 (40000+0)

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