MetaExercise $7-7$A $($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 $$25,000$ of common stock for cash.

Provided $$94,500$ of services on account.

Provided $$51,000$ of services and received cash.

Collected $$84,000$ cash from accounts receivable.

Paid $$53,000$ of salaries expense for the year.

Adjusted the accounting records to reflect uncollectible accounts expense for the year. Leach estimates that $4$ 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 $$1,400.$

Provided $$103,000$ of services on account.

Provided $$47,000$ of services and collected cash.

Collected $$96,000$ cash from accounts receivable.

Paid $$80,000$ of salaries expense for the year.

Adjusted the accounts to reflect uncollectible accounts expense for the year. Leach estimates that $4$ percent of the ending accounts receivable balance will be uncollectible.

Closed the revenue account.

Closed the expense accounts.

Exercise $7-7$A $($Algo$)$ Part a

Required

a$.$MetaPost the Year $1$ events to T$-$accounts.

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 $1?$