Exercise 7-7A

7-7A

1. Whe fack experiecaced the following eveds for the firm two years af its operibone: Yoar 1: 1. based 510000 of cominoo slock for eash 2. Prowided $78,000 of services on apcount. 3. Provided 536,000 of services and received cash. 4. Collected 589,000 cash from ancounds receivoble, 5. Paid 538,000 of salaries expense for the yar. 6. Aduusted the accountine reconds to reflest ancollecilile accounc ipenie for the year. Leali evimates that 5 percent of the endine accosits receivable falance a be becollectible. Vear 2: 1. Wrode off an uncollectible sceount for $550 2. Provides 5xk,000 of services on accouni 3. Prowided 532000 of services and collected cash. 4. Collected 581,000 sash from accounts receira)le, 5. Paid 565.000 of salaries expcose for the yraf. 6: Adjusfed the accoants to reffect uncollectible accounss expenye for the year- Leach edamales that 5 perceat of the ending accounts reccinable balance will be wocollectible. Required a. Organize the tranaction data in accoanis ander as accounting equation. 4. Prepare the income statement, statement of changes in stockholders' equity, balance abeet, and maternent of cash flows for Year I. c. What is the net realizable valoe of the accounts receivable at December 31 . Year I? d. Repeat Requirements a. b and efor Year 2 . 2. Explain how the $500 recestry of frochivablos a prreent of ncrehivbles allowance method Lrich lise exeriesced the fosowing cienis for the fint two yeun of far operutioes. Yese t: 1. loued 510,000 of cominon wask for canh. 1. Proided 378000 of services en account. 1. Phovided 536,000 of servicet and roceived cab 1. Cudected 5690000 cash from actounas roctivate. 8. Pail 5/8.000 of ralacies apense for the year. 4. Agaied the accounsing reconds to tefiect sacellectible acocuns epenue fir the year. Lach etimaies that 5 perernt of the ending aosouats receivible tointer wa te snoclectible. Year 2: 1. Whole off an uncollecuble ascouat for 3630 . 2. Provided 51s.000 of services os accose. 1. Provided $32,000 of mrricer and collecied canly. 4. Collected 981,000cash feom accounts receivable. 5. Faid 565,000 of salaries expense fire the year. 5 gercent of the ending actoonts receliable luance will be uscollecilite Required 4. Orsatixe the transaction dats in accouect under an accountiry ecuation b. Prepare the income statement, atatement of changet in stocthobder' equit, balance sheet, and satemient of cath flows for Year L. c. What is the net realizable valoe of the aceounts secehable at Desember 31. Yeat it 1. Repeat Requirenients a b, and c for Year 2 . Exerclse 7-8A Accowaring for ancollectible accoven: percear of mcchabler altwance L0 7.2, 7.3 mrethod. 1. Exlsin how ble 5500 recorery of receisabies uilfected tbe accosating equation. Exercise 77 A D. d. Explain how the $500 recovery of receivables affected the accounting equation. Exercise 7-7A Effect of recognizing uncollectible accounts on the financial statements: percent of receivables allowance method 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 $78,000 of services on account. 3. Provided $36,000 of services and received cash. 4. Collected $69,000 cash from accounts receivable. 5. Paid $38,000 of salaries expense for the year. 6. Adjusted the accounting records to reflect uncollectible accounts expense for the year. Leach estimates that 5 percent of the ending accounts receivable balance will be uncollectible. Year?: (3) Net realizable value of Accounts Receivable at December 31, Year 3. c. What amount of uncollectible accounts expense will Renue Spa have for Year 3 ? d. Explain how the $500 recovery of receivables affected the accounting equation. Exercise 7-7A Effect of recognizing uncollectible accounts on the financial statements: percent of receivables allowance method 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 $78,000 of services on account. 3. Provided $36,000 of services and received cash. 4. Collected $69,000 cash from accounts receivable. 5. Paid $38,000 of salaries expense for the year. 6. Adjusted the accounting records to reflect uncollectible accounts expense for the year. Leach estimates that 5 percent of the ending accounts receivable balance will be uncollectible. Year 2: 1. Wrote off an uncollectible account for $650. 3. Provided $36,000 of services and received cash. 4. Collected $69,000 cash from accounts receivable. 5. Paid $38,000 of salaries expense for the year. 6. Adjusted the accounting records to reflect uncollectible accounts expense for the year, Leach estimates that 5 percent of the ending accounts receivable balance will be uncollectible. Year 2: 1. Wrote off an uncollectible account for $650. 2. Provided $88,000 of services on account. 3. Provided $32,000 of services and collected cash. 4. Collected $81,000 cash from accounts receivable. 5. Paid $65,000 of salaries expense for the year. 6. Adjusted the accounts to reflect uncollectible accounts expense for the year. Leach estimates that 5 percent of the ending accounts receivable balance will be uneollectible. Required a. Organize the transaction data in atcounts under an accounting equation. b. Prepare the income statement, statement of changes in stockholders equity, balance sheet, and statement of cash flows for Year 1. c. What is the net realizable value of the accounts receivable at December 31 . Ycar 1 ? d. Repeat Requirements a,b, and c for Year 2 , Exercise 7.8A Accounting for uncollectible accounts: percent of receivables allowance 2. Frovirer sto,vur of services on account. 3. Provided $36.000 of services and received cash. 4. Collected $69,000 cash from accounts receivable. 5. Paid $38,000 of salaries expense for the year. 6. Adjusted the accounting records to reflect uncollectible accounts expense for the year. Leach estimates that 5 percent of the ending accounts receivable balance will be uncollectible. Year 2: 1. Wrote off an uncollectible account for $650. 2. Provided $88,000 of services on account. 3. Provided $32,000 of services and collected cash. 4. Collected \$81,000 cash from accounts receivable. 5. Paid $65,000 of salaries expense for the year. 6. Adjusted the accounts to reflect uncollectible accounts expense for the year. Leach estimates that 5 percent of the ending accounts receivable balance will be uncollectible. Required a. Organize the transaction data in accounts under an accounting equation. b. Prepare the income statement, statement of changes in stockholders' equity, balance sheet, and statement of cash flows for Year 1. c. What is the net realizable value of the accounts receivable at December 31 , Year 1