Required information Exercise 7-7A 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 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 $80,000 of services on account. 3. Provided $35,000 of services and received cash. 4. Collected $45,000 cash from accounts receivable. 5. Paid $22,000 of salaries expense for the year. 6. 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: 1. Wrote off an uncollectible account for $660. 2. Provided $100,000 of services on account. 3. Provided $20,000 of services and collected cash. 4. Collected $82,000 cash from accounts receivable. 5. Paid $28,000 of salaries expense for the year. 6. 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. Exercise 7-7A Part b b. Prepare an income statement, statement of changes in stockholders' equity, balance sheet, and statement of cash flows for Year 1. Complete this question by entering your answers in the tabs below. Req B Stmt Se Req B Bal Req B Inc Req B Stmt Stmt Sheet Cash Flows Prepare an income statement for Year 1. LEACH INC. Income Statement For the Year Ended December 31, Year 1 Operating expenses Total operating expenses b. Prepare an income statement, statement of changes in stockholders' equity, balance sheet, and statement of cash flows for Year 1. Complete this question by entering your answers in the tabs below. Req B Stmt Se Reg B Bal Req B Inc Req B Stmt Stmt Sheet Cash Flows Prepare the balance sheet for Year 1. LEACH INC. Balance Sheet As of December 31, Year 1 Assets Total assets Liabilities Stockholders' equity Total stockholders' equity Total liabilities and stockholders' equity b. Prepare an income statement, statement of changes in stockholders' equity, balance sheet, and statement of cash flows for Year 1. Complete this question by entering your answers in the tabs below. Req B Stmt Se Reg B Bal Req B Inc Req B Stmt Stmt Sheet Cash Flows Prepare the statement of cash flows for Year 1. (Amounts to be deducted should be indicated with a minus sign.) LEACH INC Statement of Cash Flows For the Year Ended December 31, Year 1 Cash flows from operating activities 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 Ending cash balance
