Leach Inc. experienced the following events for the first two years of its operations: 2018: 1. Issued $10,000 of common stock for cash. 2. Provided $90,000 of services on account. 3. Provided $27,000 of services and received cash. 4. Collected $63,000 cash from accounts receivable. 5. Paid $20,000 of salaries expense for the year. 6. Adjusted the accounting records to reflect uncollectible accounts expense for the year. Leach estimates that 8 percent of the ending accounts receivable balance will be uncollectible. 2019: 1. Wrote off an uncollectible account for $730. 2. Provided $110,000 of services on account. 3. Provided $25,000 of services and collected cash. 4. Collected $92,000 cash from accounts receivable. 5. Paid $22,000 of salaries expense for the year. 6. Adjusted the accounts to reflect uncollectible accounts expense for the year. Leach estimates that 8 percent of the ending accounts receivable balance will be uncollectible. LEACH INC. Accounting Equation for the Year 2019 Equity Liabilities Allowance Common Retained + stock Earnings 2,160 = 0 10,000 + 94,846 Event + Assets Accounts Receivable 27,000 Accounting Titles for Retained Earnings Cash + Bal. 80,000+ + 1. + _ + + 2. + + + 3. + + 4. + + + + + + + 5. + + + + + 6. + Bal. 80,000 + 27,000 2,160 = 0+ 10,000 + 94,846 LEACH INC. Income Statement For the Year Ended December 31, 2019 Service revenue $ 110,000 Operating expenses Salaries expense $ 22,000) Uncollectible accounts expense 0 (22,000) Total operating expenses Net income LEACH INC. Statement of Changes in Stockholders' Equity For the Year Ended December 31, 2019 Beginning common stock Ending common stock $ 0 Beginning retained earnings 0 Ending retained earnings Total stockholders' equity $ 0 Balance Sheet As of December 31, 2019 Assets 0 $ 0 Total assets Liabilities Stockholders' equity 0 Total stockholders' equity Total liabilities and stockholders' equity $ 0 LEACH INC. Statement of Cash Flows For the Year Ended December 31, 2019 Cash flows from operating activities $ 0 Net cash flow from operating activities Cash flows from investing activities Cash flows from financing activities Net change in cash 0 Ending cash balance $ 0 Net realizable value Event LEACH INC. Accounting Equation for the Year 2018 Equity Liabilities + Common Retained Allowance + stock Earnings Assets Accounts Receivable + Accounting Titles for Retained Earnings Cash 1. = + 2. = + 3. + + + + + + 4. + + + + + + + + + + + 5. 6. Bal. 0 0 0 = 0 + 0 + 0 LEACH INC. Income Statement For the Year Ended December 31, 2018 Operating expenses Total operating expenses 0 LEACH INC. Statement of Changes in Stockholders' Equity For the Year Ended December 31, 2018 Beginning common stock Ending common stock $ 0 Beginning retained earnings 0 Ending retained earnings Total stockholders' equity $ 0 Balance Sheet As of December 31, 2018 Assets 0 Total assets $ 0 Liabilities Stockholders' equity 0 Total stockholders' equity Total liabilities and stockholders' equity $ 0 LEACH INC. Statement of Cash Flows For the Year Ended December 31, 2018 Cash flows from operating activities $ 0 Net cash flow from operating activities Cash flows from investing activities Cash flows from financing activities Inflow for issue of common stock Net change in cash 0 Ending cash balance $ 0 Net realizable value
