Duffy Bros. uses the allowance method to account for bad debts expense. Duffy experienced the following four events in 2008.

1. Recognition of $64,000 of service revenue on account.

2. Collection of $56,000 cash from accounts receivable.

3. Determination that $900 of its accounts were not collectible and wrote off these receivables.

4. Recognition of uncollectible accounts expense for the year. Duffy estimates that bad debts expense will be 2 percent of its sales.

Required

Show the effect of each of these events on the elements of the financial statements, using a horizontal statements model like the following one. Use + for increase, - for decrease, and NA for not affected. In the cash flow column, indicate whether the item is an operating activity (OA), investing activity (IA), or financing activity(FA).

Assets = Liab.+ Equity Rev. Exp = Net Inc. Cash Flow Event No. Cash Accts. Rec. -Allow. = Ret. Earn.