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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 d

d. Repeat parts a, b, and c for Year 2. (If no entry is required for a transaction/event, select "No journal entry required" in the first account field. Statement of Cash Flows and Balance Sheet only: Items to be deducted must be indicated with a minus sign. Round your answers to nearest whole dollar.)

A B C D E F Wrote off an uncollectible account for $680. Note: Enter debits before credits. Transaction General Journal Debit Credit 1 Domord ontru larant Wiou aoneral iournal Journal entry worksheet Provided $92,000 of services on account. Note: Enter debits before credits. General Journal Debit Credit Transaction 2 o Provided $36,000 of services and collected cash. Note: Enter debits before credits. Debit Credit General Journal Transaction 3 View general journal cinar entry Journal entry worksheet 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. Note: Enter debits before credits. General Journal Debit Transaction 6 Credit Record entry Clear entry View general journal Required information Cash Common Stock Beg Bal. Beg. Bal. End. Bal. End. Bal Accounts Recelvable Service Ravenuo Beg. Bal Beg. Bal. End. Bal. End, Bal. Allowance for Doubtful Accounts Retained Earnings Beg Bal. Beg. Bat. End. Bal. End. Bat. Salarias Expense Uncollectible Accounts Expense Beg. Bat. Bog. Bal LEACH INC. Income Statement For the Year Ended December 31, Year 2 Operating expenses Total operating expenses 0 0 LEACH INC. Statement of Changes in Stockholders' Equity For the Year Ended December 31, Year 2 es $ GA 0 0 Total stockholders' equity $ 0 LEAGH INC. Balance Sheet As of December 31, Year 2 www Assets M 0 $ Total assets Liabilities Stockholders' equity 0 Total stockholders' equity Total liabilities and stockholders' equity $ 0 LEACH INC. Statement of Cash Flows For the Year Ended December 31, Year 2 Cash flow from operating activities $ 0 Net cash flow from operating activities Cash flows from investing activities Cash flows from financing activities Net change in cash 0 Ending cash balance $ 0 Net realizable value