1. 1. Recognized $80,000 of revenue on account.
Cheftown uses the allowance method to account for uncollectible accounts expense. Cheftown experienced the following four accounting events in 2016:
1. Recognized $80,000 of revenue on account.
2. Collected $75,000 cash from accounts receivable.
3. Determined that $1,000 of accounts receivable were not collectible and wrote them off.
4. Recognized uncollectible accounts expense for the year. Cheftown estimates that uncollectible accounts expense will be 3 percent of sales on account.
Required
a. Show the effect of each of these events on the elements of the financial statements, using a horizontal statements model.
b. Record the above transactions in general journal form.
In this exercise, we will record the transactions relating to accounts receivable in the general journal and show the effect of these transactions on the horizontal statements model.