Ultra Day Spa provided $91,650 of services during Year 1. All customers paid for the services with credit cards. Ultra submitted the credit card receipts to the credit card company immediately. The credit card company paid Ultra cash in the amount of face value less a 2 percent service charge. Required: a. Show the credit card sales (Event 1) and the subsequent collection of accounts receivable (Event 2) in 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). b. Based on this information alone, answer the following questions: (1) What is the amount of total assets at the end of the accounting period? (2) What is the amount of revenue reported on the income statement? (3) What is the amount of cash flow from operating activities reported on the statement of cash flows? Complete this question by entering your answers in the tabs below. Required A Required B Show the credit card sales (Event 1) and the subsequent collection of accounts receivable (Event 2) in a horizontal statements model. Note: Enter any decreases to account balances and cash outflows with a minus sign. For changes on the Statement of Cash Flows, indicate whether the item is an operating activity (OA), investing activity (IA), or financing activity (FA). Not all cells require input. Event 1. 2. Cash Assets + Balance Sheet Account Receivable ULTRA DAY SPA Horizontal Statements Model Liability + + Stockholders' Equity Retained Earnings Revenue < Required A Income Statement Expense = Net Income Required B > Statement of Cash Flows Show less A
Ultra Day Spa provided $91,650 of services during Year 1. All customers paid for the services with credit cards. Ultra submitted the credit card receipts to the credit card company immediately. The credit card company paid Ultra cash in the amount of face value less a 2 percent service charge. Required: a. Show the credit card sales (Event 1) and the subsequent collection of accounts receivable (Event 2) in 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). b. Based on this information alone, answer the following questions: (1) What is the amount of total assets at the end of the accounting period? (2) What is the amount of revenue reported on the income statement? (3) What is the amount of cash flow from operating activities reported on the statement of cash flows? Complete this question by entering your answers in the tabs below. Required A Required B Show the credit card sales (Event 1) and the subsequent collection of accounts receivable (Event 2) in a horizontal statements model. Note: Enter any decreases to account balances and cash outflows with a minus sign. For changes on the Statement of Cash Flows, indicate whether the item is an operating activity (OA), investing activity (IA), or financing activity (FA). Not all cells require input. Event 1. 2. Cash Assets + Balance Sheet Account Receivable ULTRA DAY SPA Horizontal Statements Model Liability + + Stockholders' Equity Retained Earnings Revenue < Required A Income Statement Expense = Net Income Required B > Statement of Cash Flows Show less A
Chapter4: The Adjustment Process
Section: Chapter Questions
Problem 2PB: To demonstrate the difference between cash account activity and accrual basis profits (net income),...
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