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Exercise 7-7A Effect of recognizing uncollectible accounts on the financial statements: percent of receivables allowance method LO 7-2

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[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 $14,000 of common stock for cash.
2. Provided $82,400 of services on account.
3. Provided $40,000 of services and received cash.
4. Collected $73,000 cash from accounts receivable.
5. Paid $42,000 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.
7. Closed the revenue account.
8. Closed the expense account.

Year 2:

1. Wrote off an uncollectible account for $680.
2. Provided $92,000 of services on account.
3. Provided $36,000 of services and collected cash.
4. Collected $85,000 cash from accounts receivable.
5. Paid $69,000 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.

Exercise 7-7A Part c

c. What is the net realizable value of the accounts receivable at December 31, Year 1?

Net Realizable Value(. )