Recording receivables and identifying their effect on statements ter 3 -1 Exerci

Question

Recording receivables and identifying their effect on statements ter 3 -1 Exercise 3-9A ash from accounts receivable during 2016, and the remaining $40,000 lectee ing 2017 16. a d. Do ne Davos Company performed services on account for S160,000 in 2016. Davos Required Exer T-accounts. a. Record the 2016 transactions in b. Reco Rive rd the 2016 transactions in a horizontal statements model like the fo Rev. - Exp. = Net Inc. ash endi Req Bas Flow Assets = Liab. + Equity Ret. Earn. Cash + Accts. Rec. = e. Determine the amount of revenue Davos would report on the 2016 income state d. Determine the amount of cash flow from operating activities Davos would report o ane Ex 2016 statement of cash flows Open a T-account for Retained Earnings, and close the 2016 Service Revenue a e. Retained Earnings account. f. Record the 2017 cash collection in the appropriate T-accounts. g. Record the 2017 transaction in a horizontal statements model like the one shown in ment b. Assuming no other transactions occur in 2017, determine the amount of net income and the net cash flow from operating activities for 2017 h.

Explanation / Answer

a. 2016 T-accounts are as prepared below:

b. Horizontal statement model is as prepared below:

c. Amount of Revenue Davos would report in 2016 Income statement will be $160,000 as the entire revenue is recognized in 2016.

d. Amount of cash Flow Davos would report in cash flow from operating activities will be $120,000.

Account Receivable Particulars Amount Particulars Amount Service Revenue 160,000 Cash 120,000 160,000 120,000 Ending balance 40,000 Cash Particulars Amount Particulars Amount Account Receivable 120,000 120,000 0 Ending balance 120,000 Service Revenue Particulars Amount Particulars Amount Account Receivable 160,000 0 160,000 Ending balance 160,000

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