A fire during 2010 destroyed most of the accounting records of Clearview Cablevision, Inc. The only accounting data for 2010 that Clearview can come up with are the following balances at December 31, 2010. The general manager also knows that bad-debt expense should be 5% of service revenue.
Accounts receivable................................................ $180,000
Less: Allowance for bad debts................................. (22,000)
Total expenses, excluding bad-debt expense............ 670,000
Collections from customers..................................... 840,000
Write-offs of bad receivables................................... 30,000
Accounts receivable, December 31, 2009................ 110,000
Prepare a summary income statement for Clearview Cablevision, Inc., for the year ended December 31, 2010. The stockholders want to know whether the company was profitable in 2010. Use a T-account for Accounts Receivable to compute service revenue.