Exercise $7-7$A $($Algo$)$ Effect of recognizing uncollectible accounts on the financial statements: Percent of receivables allowance method LO $7-2$

Skip to question

$[$The following information applies to the questions displayed below.$]$

Leach Incorporated experienced the following events for the first two years of its operations:

Year $1$:

Issued $$10,000$ of common stock for cash.

Provided $$60,000$ of services on account.

Provided $$27,000$ of services and received cash.

Collected $$33,000$ cash from accounts receivable.

Paid $$16,000$ of salaries expense for the year.

Adjusted the accounting records to reflect uncollectible accounts expense for the year. Leach estimates that $7$ percent of the ending accounts receivable balance will be uncollectible.

Year $2$:

Wrote off an uncollectible account for $$2,700.$

Provided $$80,000$ of services on account.

Provided $$15,000$ of services and collected cash.

Collected $$62,000$ cash from accounts receivable.

Paid $$28,000$ of salaries expense for the year.

Adjusted the accounts to reflect uncollectible accounts expense for the year. Leach estimates that $7$ percent of the ending accounts receivable balance will be uncollectible.

Exercise $7-7$A $($Algo$)$ Part b

b$.$ Prepare the income statement, statement of changes in stockholders$$ equity, balance sheet, and statement of cash flows for Year $1.$