60.1K

Verified Solution

Link Copied!

During the first year of operation, Year 1, Direct Service Co. recognized $440,000 of service revenue on account. At the end of Year 1, the accounts receivable balance was $72,000. For this first year in business, the owner believes uncollectible accounts expense will be about 3 percent of sales on account. Required a. What amount of cash did Direct Service collect from accounts receivable during Year 1? b. Assuming Direct Service uses the allowance method to account for uncollectible accounts, what amount should Direct Service record as uncollectible accounts expense for Year 1? c. What is the net realizable value of receivables at the end of Year 1? d. Show the effects of the given transactions on the financial statements by recording the appropriate amounts in a horizontal statements model like the one shown here. In the Cash Flow column, indicate whether the item is an operating activity (OA), investing activity (IA), or financing activity (FA). For events that have no effect, leave the cell blank. Complete this question by entering your answers in the tabs below. Req A to C Req D What amount of cash did Direct Service collect from accounts receivable during Year 1? Assuming Direct Service uses the allowance method to account for uncollectible accounts, what amount should Direct Service record as uncollectible accounts expense for Year 1? What is the net realizable value of receivables at the end of Year 1? a. Collections of accounts receivable b. Uncollectible accounts expense Net realizable value C.

During the first year of operation, Year 1, Direct Service Co, recognized $440,000 of service revenue on account. At the end of Year 1 , the accounts receivable balance was $72,000. For this first year in business, the owner believes uncollectible accounts expense will be about 3 percent of sales on account: Required a. What amount of cash did Direct Service collect from accounts recelvable during Year 1 ? b, Assuming Direct Service uses the allowance method to account for uncollectible accounts, what amount shouid Direct Service record as uncollectible accounts expense for Year 1 ? c. What is the net realizoble value of receivables at the end of Year 1 ? d. Show the effects of the given transactions on the financial statements by recording the appropriate amounts in a horizontal statements model like the one shown here. In the Cash Flow column, indicate whether the item is an operating octivity (OA). investing activity (IA), or financing activity (FA) For events that have no effect, leave the cell blank. Complete this question by entering your answers in the tabs below. What amount of cash did Direct Servee colect from accounts receivable during Year 1 ? Assuming Direct Service uses the allowance method to account for uncollectible accounts, what amount should Direct Service record as uncollectible accounts expense for Year 1 ? What is the net realizable value of receivables at the end of Year 1

Answer & Explanation Solved by verified expert

See Answer