20 revenue 9000 bad debt expense effect of event 3

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Unformatted text preview: xpense Effect of Event 3 Net Realizable Value Realizable Before Event 3 Before Acc. rec. $4,050 Allow. 70 N.R.V. $3,980 After Event 3 After Acc. rec. $4,000 Allow. 20 N.R.V. $3,980 Net realizable value of accounts receivable did not change as a result of the write-off. the Transaction 4(a) Transaction At year-end it was estimated that 2% of At credit sales will never be collected. credit Assets = Assets - 180 (Allow.) Liab. n/a + C. Stock + Ret. Earn. n/a - 180 Income Statement: net income decreased Statement of Changes in Equity: equity decreased Statement Statement of Cash Flows: cash flow was not affected affected Selected T-accts for Our Co. Selected Cash xx beg. bal. 6,000 Accts Rec. 1,050 (bal.) 6,000 9,000 50 4,000 (bal.) Allow. for Doubt. Acc. 50 (bal.) 70 (bal.) 20 180 (bal.) 200 Revenue 9,000 Bad Debt Expense 180 Transaction 4(b) Transaction At year-end it was estimated that 4% of At accounts receivables will never be collected. collected. Assets = Assets - 140 (Allow.) Liab. n/a + C....
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