Required information

Exercise 7-7A (Algo) Effect of recognizing uncollectible accounts on the financial statements: Percent of receivables allowance method LO 7-2

Leach Incorporated experienced the following events for the first two years of its operations:

Year 1:

Issued $10,000 of common stock for cash.

Provided $70,000 of services on account.

Provided $25,000 of services and received cash.

Collected $45,000 cash from accounts receivable.

Paid $20,000 of salaries expense for the year.

Adjusted the accounting records to reflect uncollectible accounts expense for the year. Leach estimates that 7 percent of the ending accounts receivable balance will be uncollectible.

Year 2:

Wrote off an uncollectible account for $2,590.

Provided $90,000 of services on account.

Provided $20,000 of services and collected cash.

Collected $72,000 cash from accounts receivable.

Paid $22,000 of salaries expense for the year.

Adjusted the accounts to reflect uncollectible accounts expense for the year. Leach estimates that 7 percent of the ending accounts receivable balance will be uncollectible.

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