A fire during 2008 destroyed most of the accounting records of Clearview Cablevision, Inc. The only accounting data for 2008 that Clearview can come up with are the following balances at December 31, 2008. The general manager also knows that bad debt expense should be 5% of service revenue.
|
Accounts receivable |
$180,000 |
|
Less: Allowance for bad debts |
(22,000) |
|
Total expenses, excluding bad debt expense |
30,000 |
|
Collections from customers |
110,000 |
|
Write offs of bad receivables |
670,000 |
|
Accounts receivable, December 31, 2007 |
840,000 |
Prepare a summary income statement for Clearview Cablevision, Inc., for the year ended December 31, 2008. The stockholders want to know whether the company was profitable in 2008. Use a T account for Accounts Receivable to compute service revenue.