Question

Rosie Dry Cleaning was started on January 1, 2018. It experienced the following events during its first two years of operation:

Events Affecting 2018

1. Provided $32,050 of cleaning services on account.
2. Collected $25,640 cash from accounts receivable.
3. Adjusted the accounting records to reflect the estimate that uncollectible accounts expense would be 1 percent of the cleaning revenue on account.

Events Affecting 2019

1. Wrote off a $240 account receivable that was determined to be uncollectible.
2. Provided $37,402 of cleaning services on account.
3. Collected $33,101 cash from accounts receivable.
4. Adjusted the accounting records to reflect the estimate that uncollectible accounts expense would be 1 percent of the cleaning revenue on account.

Required

1. Organize the transaction data in accounts under an accounting equation for each year.
2. Determine the following amounts:

1. (1) Net income for 2018.
2. (2) Net cash flow from operating activities for 2018.
3. (3) Balance of accounts receivable at the end of 2018.
4. (4) Net realizable value of accounts receivable at the end of 2018.

3. Determine the following amounts:

1. (1) Net income for 2019.
2. (2) Net cash flow from operating activities for 2019.
3. (3) Balance of accounts receivable at the end of 2019.
4. (4) Net realizable value of accounts receivable at the end of 2019.

Answer 1

a

rosie dry cleaning
accounting equation for the year 2018
event	assets						equity		account titles
	cash	+	account receivable	-	allowance	=	retained earnings
1		+	32050$	-		=	32050$		service revenue
2	25640$	+	(25640)$	-		=
3		+		-	320.5$*	=	(320.5)$		bad debt expense
balance	25640$	+	6410$	-	320.5$	=	31729.5$
*32050*1%

rosie dry cleaning
accounting equation for the year 2018
event	assets						equity		account titles
	cash	+	account receivable	-	allowance	=	retained earnings
balance	25640$	+	6410$	-	320.5$	=	31729.5$
1		+	(240)$	-	(240)$	=
2		+	37402$	-		=	37402$		service revenue
3	33101$	+	(33101)$	-		=
4		+		-	*293.52$	=	(293.52)$		bad debt expense
balance	58741	+	10471	-	374.02	=	68837.98
320.5-240	=	80.5
37402*1%	=	374.02
374.02-80.5	=	*293.52

b

	$2018
1.net income	31729.5
2.net cash flow from operating activities	25640
3.balance of account receivables	6410
4.net realizable value of account receivables	6089.5	6410-320.5

c

	$2019
1.net income	37108.48	37402$ -293.52
2.net cash flow from operating activities	33101
3.balance of account receivables	10471
4.net realizable value of account receivables	10096.98	10471-374.02

HOPE THIS WAS HELPFUL. DO CONSIDER GIVING THIS A THUMPS UP.