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 $78,000 of services on account. 3. Provided $36,000 of services and received cash. 4. Collected $69,000 cash from accounts receivable. 5. Paid $38,000 of salaries expense for the year. 6. Adjusted the accounting records to reflect uncollectible accounts expense for the year. Leach estimates that 5 percent of the ending accounts receivable balance will be uncollectible. Year 2: 1. Wrote off an uncollectible account for $650. 2. Provided $88,000 of services on account. 3. Provided $32,000 of services and collected cash. 4. Collected $81,000 cash from accounts receivable. 5. Paid $65,000 of salaries expense for the year. 6. Adjusted the accounts to reflect uncollectible accounts expense for the year. Leach estimates that 5 percent of the ending accounts receivable balance will be uncollectible. Complete this question by entering your answers in the tabs below. Req B Inc Stmt Req B Stmt SE Req B Bal Sheet Req B Stmt 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 Reg B Inc Stm Req B Stmt SE > Req B Inc Stmt Req B Stmt SE Req B Bal Sheet Req B Stmt Cash Flows Prepare the balance sheet for Year 1. Reg B Stmt Cash Flows LEACH INC. Balance Sheet As of December 31, Year 1 Assets Total assets Liabilities Stockholders' equity : Total stockholders' equity Total liabilities and stockholders' equity