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

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

Year 1:

Issued $13,000 of common stock for cash.

Provided $81,300 of services on account.

Provided $39,000 of services and received cash.

Collected $72,000 cash from accounts receivable.

Paid $41,000 of salaries expense for the year.

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.

Closed the revenue account.

Closed the expense accounts.

Year 2:

Wrote off an uncollectible account for $800.

Provided $91,000 of services on account.

Provided $35,000 of services and collected cash.

Collected $84,000 cash from accounts receivable.

Paid $68,000 of salaries expense for the year.

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.

Closed the revenue account.

Closed the expense accounts.

A Issued $13,000 of common stock for cash. Record the entry. B Provided $81,300 of services on account. Record the entry. C Provided $39,000 of services and received cash. Record the entry. D Collected $72,000 cash from accounts receivable. Record the entry. E Paid $41,000 of salaries expense for the year. Record the entry. Note : = journal entry has been entered 1 Required information