Patel Service Company does make a few sales on account but is mostly a cash business. Consequently, it uses the direct write$-$off method to account for uncollectible accounts. During Year $1,$ Patel Service Company earned $$38,750$ of cash revenue and $$9,688$ of revenue on account. Cash operating expenses were $$27,765.$ After numerous attempts to collect a $$237$ account receivable from Sam Stephens, the account was determined to be uncollectible in Year $1.$

Required:

Show the effects of

 $(1)$ cash revenue, 

$(2)$ revenue on account,

 $(3)$ cash expenses, and 

$(4)$ write off of the uncollectible account on the financial statements using a horizontal statements model. In the Statement of Cash Flows column, indicate whether the item is an operating activity $($OA$),$ investing activity $($IA$),$ or financing activity $($FA$).$ 

 

What amount of net income did Patel Service Company report on the Year $1$ income statement?

Answer rating: 100% (QA)

To show the effects of the given transactions on the financial statements using a horizontal model w... View the full answer