In the First Year of Operations,2016,John's Repair Service Recognized $220,000

question 30

Essay

In the first year of operations,2016,John's Repair Service recognized $220,000 of service revenue on account.The ending accounts receivable balance was $15,100.Jake estimates that 3% of sales on account will not be collected;no accounts receivable had been written off by year end.Assume there were no other transactions affecting accounts receivable.
a)What amount of cash was collected in 2016?
b)What amount of uncollectible accounts expense was recognized in 2016?

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Definitions:

Price Floor

A government or regulatory minimum price that must be paid for a good or service, intended to prevent prices from falling too low.

Shortage

A market condition where demand exceeds supply.

Surplus

A situation where the quantity of a good or service supplied exceeds the quantity demanded, often resulting in excess stock and potential price reductions.

Price Ceiling

A government-imposed limit on how high a price can be charged for a product or service, intending to protect consumers from excessive prices.