! Required information 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 Incorporated 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 $70,000 of services on account. 3. Provided $31,000 of services and received cash. 4. Collected $39,000 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 6 percent of the ending accounts receivable balance will be uncollectible. Year 2: 1. Wrote off an uncollectible account for $2,600. 2. Provided $90,000 of services on account. 3. Provided $30,000 of services and collected cash. 4. Collected $72,000 cash from accounts receivable. 5. Paid $26,000 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. Exercise 7-7A (Algo) Part a Required: a. Organize the transaction data in accounts under an accounting equation. Note: Enter any decreases to account balances with a minus sign. Not all cells require input. Assets Event Cash + NRV Accounts Receivable 1. + = LEACH INCORPORATED Accounting Equation for Year 1 Equity Liabilities + Common Stock + Retained Earnings Account Titles for Retained Earnings + + 2. + = + + 3. + = + + 4. + + + 5. + + 6. + + Balance 0+ 0 0 + 0 + 0