ercise 3-9A Recording receivables and identifving their effect on finano stateme
ID: 2539383 • Letter: E
Question
ercise 3-9A Recording receivables and identifving their effect on finano statements Davos s Company performed services on account for S160,000 in 2016. Davos rom accounts receivable during 2016, and the remaining $40,000 was collec ing 2017 Required a. Record the 2016 transactions in T-accounts b. Record the 2016 transactions in a horizontal statements model like the following one: = Liab. + Equity Rev. - Exp Net Inc. Cash Flow Assets Cash + Accts. Rec. = Ret. Earn. c. Determine the amount of revenue Davos would report on the 2016 income statement. d. Determine the amount of cash flow 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 Earnings account. e. 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 Require ment b h. Assuming no other transactions occur in 2017, determine the amount of net income and the net cash flow from operating activities for 2017.Explanation / Answer
a. T accounts
b. Horizontal statement
c. Amount of Revenue Davos would report in 2016 Income statement will be $160,000.
d. Amount of cash flow reported in 2016 in operating activities will be $120,000.
e. T-account for Retained earnings is:
f. 2017 cash collection is as shown below:
g.
h. Net cash flow from operating activities will be $40,000 and net income will be 0.
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 160,000Related Questions
Navigate
Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.