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 a Required a. Organize the transaction data in accounts under an accounting equation. (Enter any decreases to account balances with a minus sign. Not all cells in the "Accounts Titles for Retained Earnings" column may require an input - leave cells blank if there is no corresponding Retained Earnings input needed.) LEACH INC. Accounting Equation for the Year 1 Equity Liabilities + Common Allowance Retained stock Earnings Assets Accounts Receivable Event Accounting Titles for Retained Earnings Cash + 1. + + + 2. + + 3 + + 4. + + + + + + + 5. + + + + + 6. + Bal. +