Exercise 7-7A

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. 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. 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 cquation. 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 ? d. Repeat Requirements a,b, and c for Year 2 . Exercise 7-8A Accounting for uncollectible accounts: percent of receivables allowance method Exercise 7.7A Effect of recognizing uncollecrible acconnts on the financial Aatements: percent of ncehisbles allowance method tach inc experienced the following events for the fint two years of its operations: Yoar 1: 1. husud S 50.000 of common stock for cas. 2. Pronded $78.000 of services on accoest. 1. Provided $36,000 of nerviees and received cash. 4. Collected 5690000 cash from accouais receivable. 5. Paid 5318.000 of salaries expense for the year. 6. Adjusted the accounting records to reflect uncollectible accoants expense for the year. Leach rstimaies that 5 percent of the ending accounts rectivble bulance will be uncollectible. Year 2: 1. Wrote off an ancollicitible account for 5650 . 2. Prorided 588,000 of services on account. 1. Frovided $32,000 of services and colloted cash. 4. Collected $81,000 cast from accounts receivable. 5. Paid $65,000 of salaries expense for the yrar. 6. Adeand the accoants to reflect aneollectible accounts sxpense for the year Leach estimate that 5 percent of the eading accounis receivable balance will be uncollectible. Required 4. Orpanize the trancaction data in accounts under an accounting scmation. b. Prepare the income statement, statement of changes in stockholder's equity, balance sheet, and: shilement of cash flows for Year I. 6. What is the net realizable value of tho accounts receivablo at December J. Year I? 4. Repeat Requirements a,b, and c for Year 2 . d. Explain how the $500 recovery of receivables affected the accounting equation. Exercise 7-7A Effect of necognizing uncollectible account on the financial statemenfsi pencent of neceivables allowance method Leach Ine. experienced the following events for the firs two years of its operations: Year 1: 1. Issaed $10,000 of common stock for cash. 2. Provided $78,000 of services on account. 3. Provided $36.000 of services and received cath. 4. Collected $69,000 cash from accounis receivable. 5. Paid 538,000 of salaries expense for the year. 6. Adgusied the accounting tecints to reflect uncoliectible accounts expense for the year. Leach estimates that 5 percent of tho ending accounts receivable balance will be ubcollectible. Year 2: 1. Wrote off an uncollectible account for $650. 2. Provided $88,000 af services on aceount. 3. Provided $32,000 of services and collected cash, 4. Collected 581,000 cash from accounts receivable. 5. Paid $65,000 of salaries expense for the year. 6. Adjusted the accounts to reflece uncollectable accounts expense for the year, Leach erimates that 5 percent of the ending accounts receivable balance will be uncollectible. Required a. Organize the transaction data in accounts inder an accoonting equation. b. Prepare the income statement, statement of changes in stockholders' equity, balance sheet, and: Exercise 7.7A Effect of recognizing uncollectible accounts an the fisancial statements: percent of recreivalles allowance method l. each litc, experienced the following oeents for the first two years of its operations: Year 1: 1. Issucd $10000 of common stock for cash. 2. Provided $78,000 of services on accosint. 3. Provided $26,000 of services and received eash. 4. Collected $69.000 cash from ascounts receivable. 5. Paid 338,000 of ualaries expense for the yeat: 6. Adjusted the accounting recorts to reflect uncolleccible accounts expense for the year Leach. estimates that 5 peroent of the ending accounts receivable balance will be uncollectible. Year 2: 1. Wrole off an uncollectible acceuat for $650. 2. Pronided $88,000 of services on accoent. 3. Provided $82,000 of services and collected canh. 4. Collected 581,000 cash from accounts receivable. 5. Paid $65,000 of salaries expense for the year. 6. Adfasted the accounts to reflect ancolloctible accousts expense for the year. Leach essimates that 5 perceat of the ending accounts receivable balance will be uncollectible. Required a. Organize the thinsaction data in accounts under an accounting cquation. b. Prepare the incomte statement, statement of changes in stockholders' equity. balance shicet, and statement of cash flows for Year 1. c. What is the net realimble value of the aceounts roceivable at December 31 . Ycar 1 ? 4. Repeat Requirenseais a, b and c for Year 2 2. Froviced $18,000 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. 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 ? d. Repeat Requirements a,b, and c for Year 2