Che Exercise 7-7A Effect of recognizing uncollectible accounts on the financial statements: Percent of receivables allowance method LO 7-2 {The following information applies to the questions displayed below) Leach Inc experienced the following events for the first two years of its operations: Year 1: 1. Issued $10,000 of common stock for cash. 2. Provided $90,000 of services on account 3. Provided $29,000 of services and received cash. 4. Collected $61,000 cash from accounts receivable. 5. Paid $20,000 of salaries expense for the year. 6. Adjusted the accounting records to reflect uncollectible accounts expense for the year. Leach estimates that 8 percent of the ending accounts receivable balance will be uncollectible Year 2: 1. Wrote off an uncollectible account for $670, 2. Provided $110,000 of services on account 3. Provided $25,000 of services and collected cash. 4. Collected $92,000 cash from accounts receivable. 5. Pald $22.000 of salarios expense for the year 6. Adjusted the accounts to reflect uncollectible accounts expense for the year Leach estimates that 8 percent of the ending accounts receivable balance will be uncollectible. Exercise 7-7A Part d 4 of 4 d.1. Organize the transaction data in accounts under an accounting equation for Year 2. d-2. Prepare an income statement for Year 2 d-3. Prepare the statement of changes in stockholders' equity for Year 2. d-4. Prepare the balance sheet for Year 2 d-5. Prepare the statement of cash flows for Year 2 d-6. What is the net realizable value of the accounts receivable at December 31, Year 2? Complete this question by entering your answers in the tabs below. Reg 01 Reg D2 Reg D3 Reg D4 Reg DS Reg D6 Organize the transaction data in accounts under an accounting equation for Year 2. (Enter any decreases to account balances with a minus su "Accounts Tities for Retained Earnings" column may require an input - leave cells blank if there is no corresponding Retained Earnings input LEACHING Accounting Equation for the Year 2 Assets Equity Event Accounts Cash Accounting Titles for Retained Liabilities Allowance Common Receivable Retained Earnings stock Earnings Bal 1 2 3 4 5 0. Bal + Complete this question by entering your answers in the tabs below. Reg D6 Reg D1 Req D2 Reg D3 Req D4 Reg DS Prepare an income statement for Year 2. (Round your intermediate calculations and final answers to the nearest whole dollar) LEACHINC Income Statement For the Year Ended December 31. Year 2 Operating expenses Total operating expenses Req Req3 > Complete this question by entering your answers in the tabs below. ReqD1 Reg DZ Reg D3 Reg D4 Reg DS Reg D6 Prepare the statement of changes in stockholders' equity for Year 2. (Round your intermediate calculations and final answers to the nearest whole dollar) LEACH INC. Statement of Changes in Stockholdern' Equity For the Year Ended December 31, Year 2 Beginning common stock Ending common stock Begirning retained earnings Ending retained earnings Total stockholders' equity LEACH INC. Statement of Changes in Stockholders' Equity For the Year Ended December 31, Year 1 Beginning common stock Plus: Common stock issued 10,000 Ending common stock $ 10,000 96,680 Beginning retained earnings Plus: Net income Ending retained earnings Total stockholders' equity 96,680 $ 106,680 Prepare the balance sheet for Year 1. LEACH INC. Balance Sheet As of December 31, Year 1 Assets Cash $ 80,000 $ 29,000 (2,320) 26,680 $ 106,680 Accounts receivable Less: Allowance for doubtful accounts Total assets Liabilities Stockholders' equity Common stock Retained earnings $ 10,000 96,680 Total stockholders' equity Total liabilities and stockholders' equity 106,680 $ 106,680 Req B Stmt Req B Stmt SE Reg B Bal Sheet Req B Stmt Cash Flows Prepare the statement of cash flows for Year 1. (Amounts to be deducted should be indicated with LEACH INC. Statement of Cash Flows For the Year Ended December 31, Year 1 Cash flows from operating activities Inflow from customers $ 90,000 (20,000) $ 70,000 Outflow for expenses Net cash flow from operating activities Cash flows from investing activities Cash flows from financing activities Inflow for issue of common stock Net change in cash Plus: Beginning cash balance Ending cash balance 10,000 80,000 $ 80,000 Complete this question by entering your answers in the tabs below. ReqD1 Reg DZ Reg D3 Reg D4 Reg DS Reg D6 Prepare the statement of changes in stockholders' equity for Year 2. (Round your intermediate calculations and final answers to the nearest whole dollar) LEACH INC. Statement of Changes in Stockholdern' Equity For the Year Ended December 31, Year 2 Beginning common stock Ending common stock Begirning retained earnings Ending retained earnings Total stockholders' equity LEACH INC. Statement of Changes in Stockholders' Equity For the Year Ended December 31, Year 1 Beginning common stock Plus: Common stock issued 10,000 Ending common stock $ 10,000 96,680 Beginning retained earnings Plus: Net income Ending retained earnings Total stockholders' equity 96,680 $ 106,680 Prepare the balance sheet for Year 1. LEACH INC. Balance Sheet As of December 31, Year 1 Assets Cash $ 80,000 $ 29,000 (2,320) 26,680 $ 106,680 Accounts receivable Less: Allowance for doubtful accounts Total assets Liabilities Stockholders' equity Common stock Retained earnings $ 10,000 96,680 Total stockholders' equity Total liabilities and stockholders' equity 106,680 $ 106,680 Req B Stmt Req B Stmt SE Reg B Bal Sheet Req B Stmt Cash Flows Prepare the statement of cash flows for Year 1. (Amounts to be deducted should be indicated with LEACH INC. Statement of Cash Flows For the Year Ended December 31, Year 1 Cash flows from operating activities Inflow from customers $ 90,000 (20,000) $ 70,000 Outflow for expenses Net cash flow from operating activities Cash flows from investing activities Cash flows from financing activities Inflow for issue of common stock Net change in cash Plus: Beginning cash balance Ending cash balance 10,000 80,000 $ 80,000
