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

Required information 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 $11,000 of common stock for cash. 2. Provided $79,100 of services on account. 3. Provided $37,000 of services and received cash. 4. Collected $70,000 cash from accounts receivable. 5. Paid $39,000 of salaries expense for the year. 6. Adjusted the accounting records to reflect uncollectible accounts expense for the year. Leach estimates that 6 percent of the ending accounts receivable balance will be uncollectible. 7. Closed the revenue account. 8. Closed the expense account. Year 2: 1. Wrote off an uncollectible account for $700. 2. Provided $89,000 of services on account. 3. Provided $33,000 of services and collected cash. 4. Collected $82,000 cash from accounts receivable. 5. Paid $66,000 of salaries expense for the year. 6. Adjusted the accounts to reflect uncollectible accounts expense for the year. Leach estimates that 6 percent of the ending accounts receivable balance will be uncollectible. X A Record entry for issuance of common stock. B Record services on account. Record cash received for services provided. D Record entry for collection of accounts receivable. E Record cash paid for salaries. F Record entry for uncollectable accounts expenses. G Record entry to close service revenue account. H Record entry to close expenses account. Cash Common Stock Beg. Bal. Beg. Bal. End. Bal. End. Bal. Accounts Receivable Retained Earnings Beg. Bal. Beg. Bal. End. Bal. End. Bal. Allowance for Doubtful Accounts Service Revenue Beg. Bal. Beg. Bal. End. Bal. Bal. End. Bal. Uncoll. Accts. Expense Salaries Expense Beg. Bal. Beg. Bal. Bal. Bal End. Bal. End. Bal