Exercise 7-7A (Algo) 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 $60,000 of services on account. 3. Provided $31,000 of services and received cash. 4. Collected $29,000 cash from accounts receivable. 5. Paid $16,000 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 $2,560 2. Provided $80,000 of services on account. 3. Provided $30,000 of services and collected cash 4. Collected $62,000 cash from accounts receivable, 5. Paid $24,000 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. ercise 7-7A (Algo) Part What is the net realizable value of the accounts receivable at December 31, Year 1? Saved 1. Issued $10,000 of common stock for cash. 2. Provided $60,000 of services on account. 3. Provided $31,000 of services and received cash. 4. Collected $29,000 cash from accounts receivable. 5. Paid $16,000 of salaries expense for the year. 6. Adjusted the accounting records to reflect uncollectible accounts expense for the year. Leach estimates that 5 per- of the ending accounts receivable balance will be uncollectible. Year 2: 1. Wrote off an uncollectible account for $2,560. 2. Provided $80,000 of services on account. 3. Provided $30,000 of services and collected cash. 4. Collected $62,000 cash from accounts receivable. 5. Paid $24,000 of salaries expense for the year. 6. Adjusted the accounts to reflect uncollectible accounts expense for the year. Leach estimates that 5 percent of tr ending accounts receivable balance will be uncollectible. Exercise 7-7A (Algo) Part c c. What is the net realizable value of the accounts receivable at December 31, Year 1? Net realizable value