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CB Winter Sports specializes in providing ski lessons to beginners. The company uses the allowance method to account for uncollectible accounts expense. CB Winter Sports experienced the following four accounting events in Year 1: 1. Recognized $266,000 of revenue on account. 2. Collected $126,000 cash from accounts receivable 3. Wrote off uncollectible accounts of $2,300. 4. Recognized uncollectible accounts expense. CB Winter Sports estimated that uncollectible accounts expense will be 3 percent of sales on account. Required: Use a horizontal financial statements model to show how each event affects the balance sheet, income statement, and statement of cash flows. More specifically, record the amounts of the events into the model. Also, in the Statement of Cash Flows column, classify the cash flows as operating activities (OA), investing activities (IA), or financing activities (FA). The first transaction is shown as an example. Note: Enter any decreases to account balances and cash outflows with a minus sign. Leave cells blank if no input is needed. Balance Sheet Liabilities Income Statement Assets Event Number Net Realizable Cash Value of Accounts Receivable 1. 2. 3. 4 Total + 0+ "NC Net change in cash Stockholders' Equity Accounts Payable Common Stock Retained Earnings Revenue Expenses = Net Income Statement of Cash Flows 266,000 + 266,000 266,000 266,000 266,000 E 0+ 266,000 266,000 0 = 266,000 NC

CB Winter Sports specializes in providing ski lessons to beginners. The company uses the allowance method to account for uncollectible accounts expense. CB Winter Sports experienced the following four accounting events in Year 1: 1. Recognized $266,000 of revenue on account. 2. Collected $126,000 cash from accounts receivable 3. Wrote off uncollectible accounts of $2,300. 4. Recognized uncollectible accounts expense. CB Winter Sports estimated that uncollectible accounts expense will be 3 percent of sales on account. Required: Use a horizontal financial statements model to show how each event affects the balance sheet, income statement, and statement of cash flows. More specifically, record the amounts of the events into the model. Also, in the Statement of Cash Flows column, classify the cash flows as operating activities (OA), investing activities (IA), or financing activities (FA). The first transaction is shown as an example. Note: Enter any decreases to account balances and cash outflows with a minus sign. Leave cells blank if no input is needed. Balance Sheet Liabilities Income Statement Assets Event Number Net Realizable Cash Value of Accounts Receivable 1. 2. 3. 4 Total + 0+ "NC Net change in cash Stockholders' Equity Accounts Payable Common Stock Retained Earnings Revenue Expenses = Net Income Statement of Cash Flows 266,000 + 266,000 266,000 266,000 266,000 E 0+ 266,000 266,000 0 = 266,000 NC

FINANCIAL ACCOUNTING
FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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CB Winter Sports specializes in providing ski lessons to beginners. The company uses the allowance method to account for uncollectible accounts expense. CB Winter Sports experienced the following four accounting events in Year 1: 1. Recognized $266,000 of revenue on account. 2. Collected $126,000 cash from accounts receivable 3. Wrote off uncollectible accounts of $2,300. 4. Recognized uncollectible accounts expense. CB Winter Sports estimated that uncollectible accounts expense will be 3 percent of sales on account. Required: Use a horizontal financial statements model to show how each event affects the balance sheet, income statement, and statement of cash flows. More specifically, record the amounts of the events into the model. Also, in the Statement of Cash Flows column, classify the cash flows as operating activities (OA), investing activities (IA), or financing activities (FA). The first transaction is shown as an example. Note: Enter any decreases to account balances and cash outflows with a minus sign. Leave cells blank if no input is needed. Balance Sheet Liabilities Income Statement Assets Event Number Net Realizable Cash Value of Accounts Receivable 1. 2. 3. 4 Total + 0+ "NC Net change in cash Stockholders' Equity Accounts Payable Common Stock Retained Earnings Revenue Expenses = Net Income Statement of Cash Flows 266,000 + 266,000 266,000 266,000 266,000 E 0+ 266,000 266,000 0 = 266,000 NC
Transcribed Image Text:CB Winter Sports specializes in providing ski lessons to beginners. The company uses the allowance method to account for uncollectible accounts expense. CB Winter Sports experienced the following four accounting events in Year 1: 1. Recognized $266,000 of revenue on account. 2. Collected $126,000 cash from accounts receivable 3. Wrote off uncollectible accounts of $2,300. 4. Recognized uncollectible accounts expense. CB Winter Sports estimated that uncollectible accounts expense will be 3 percent of sales on account. Required: Use a horizontal financial statements model to show how each event affects the balance sheet, income statement, and statement of cash flows. More specifically, record the amounts of the events into the model. Also, in the Statement of Cash Flows column, classify the cash flows as operating activities (OA), investing activities (IA), or financing activities (FA). The first transaction is shown as an example. Note: Enter any decreases to account balances and cash outflows with a minus sign. Leave cells blank if no input is needed. Balance Sheet Liabilities Income Statement Assets Event Number Net Realizable Cash Value of Accounts Receivable 1. 2. 3. 4 Total + 0+ "NC Net change in cash Stockholders' Equity Accounts Payable Common Stock Retained Earnings Revenue Expenses = Net Income Statement of Cash Flows 266,000 + 266,000 266,000 266,000 266,000 E 0+ 266,000 266,000 0 = 266,000 NC
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