(Solution) - Gray Bros uses the allowance method to account for bad -(2025 Original AI-Free Solution)

Paper Details

Gray Bros. uses the allowance method to account for bad debts expense. Gray experienced the following four events in 2012.
1. Recognition of $48,000 of service revenue on account.
2. Collection of $42,000 cash from accounts receivable.
3. Determination that $300 of its accounts were not collectible and wrote off these receivables.
4. Recognition of uncollectible accounts expense for the year. Gray estimates that bad debts expense will be 2 percent of its service revenue.

Required
Show the effect of each of these events on the elements of the financial statements, using a horizontal statements model like the following one. Use + for increase ? for decrease, and NA for not affected. In the cash flow column, indicate whether the item is an operating activity (OA), investing activity (IA), or financing activity(FA).