Rosie Dry Cleaning was started on January 1, 2016. It experienced the following
ID: 2525524 • Letter: R
Question
Rosie Dry Cleaning was started on January 1, 2016. It experienced the following events during its first two years of operation:
Adjusted the accounting records to reflect the estimate that uncollectible accounts expense would be 1 percent of the cleaning revenue on account.
Wrote off a $257 account receivable that was determined to be uncollectible.
Adjusted the accounting records to reflect the estimate that uncollectible accounts expense
would be 1 percent of the cleaning revenue on account.
a. Record the events for 2016 and 2017 in T-accounts.(Round your answers to nearest whole dollar.)
Rosie Dry Cleaning was started on January 1, 2016. It experienced the following events during its first two years of operation:
b. Determine the following amounts: (Round your intermediate calculations to nearest whole dollar.) (1) Net Income for 2016 (2) Net Cash Flow from Operating Activities for 2016 (3) Balance of Accounts Receivable at the end of 2016 (4) Net Realizable Value of Accounts Receivable at the end of 2016 c. Repeat Requirements b for the 2017 accounting period. (Round your intermediate calculations to nearest whole dollar.) (1) Net Income for 2017 (2) Net Cash Flow from Operating Activities for 2017 (3) Balance of Accounts Receivable at the end of 2017 4) Net Realizable Value of Accounts Receivable at the end of 2017Explanation / Answer
Answer
Service Revenue (A)
$34290
Cash Collected (B)
$27432
Account receivables balance (A – B)
$6858
Bad debt expense (A x 1%)
$343
Answer
Accounts receivables
Service revenue
$ 34,290.00
Cash collected
$ 27,432.00
Ending balance
$ 6,858.00
Total
$ 34,290.00
Total
$ 34,290.00
Allowance for Doubtful Accounts
Ending balance
$ 343.00
Bad Debt expenses
$ 343.00
Total
$ 343.00
Total
$ 343.00
1
Net Income for 2016
[service revenue - bad debt expense]
$ 33,947.00
2
Net cash flow from operating activity
$ 27,432.00
3
Balance of accounts receivables at the end of 2016
[34290 - 27432]
$ 6,858.00
4
Net Realizable Value of A/R at the end of 2016
[6858 - 343]
$ 6,515.00
Accounts Receivables
Allowances for doubtful account
Beginning balance
$ 6,858.00
$ 343.00
Account written off
$ (257.00)
$ (257.00)
Service revenue
$ 40,016.00
Cash received
$ (35,414.00)
Bad Debt expense
$ 400.00
Ending 2017 balance
$ 11,203.00
$ 486.00
Answer
Accounts receivables
Beginning balance
$ 6,858.00
Cash collected
$ 35,414.00
Service revenue
$ 40,016.00
Allowances for doubtful account
$ 257.00
Ending balance
$ 11,203.00
Total
$ 46,874.00
Total
$ 46,874.00
Allowance for Doubtful Accounts
Accounts receivables
$ 257.00
Beginning balance
$ 343.00
Ending balance
$ 486.00
Bad Debt expenses
$ 400.00
Total
$ 743.00
Total
$ 743.00
1
Net Income for 2017
[service revenue - bad debt expense]
$ 39,616.00
2
Net cash flow from operating activity
$ 35,414.00
3
Balance of accounts receivables at the end of 2016
[working above]
$ 11,203.00
4
Net Realizable Value of A/R at the end of 2016
[11203 - 486]
$ 10,717.00
Service Revenue (A)
$34290
Cash Collected (B)
$27432
Account receivables balance (A – B)
$6858
Bad debt expense (A x 1%)
$343
Related Questions
Navigate
Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.