Required information Exercise 7-7A (Static) 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. Exercise 7-7A (Static) Part d d-1. Organize the transaction data in accounts under an accounting equation for Year 2. d-2. Prepare an income statement for Year 2. d-3. Prepare the statement of changes in stockholders' equity for Year 2. d-4. Prepare the balance sheet for Year 2. d-5. Prepare the statement of cash flows for Year 2. d-6. What is the net realizable value of the accounts receivable at December 31, Year 2? Req D1 Req D2 Reg D3 Reg D4 Req D5 Req D6 Organize the transaction data in accounts under an accounting equation for Year 2. (Enter any decreases to account balances with a minus sign. Not all cells require input. Round your intermediate calculations and final answer to the nearest whole dollar.) LEACH INC. Accounting Equation for Year 2 Equity Liabilities Common Retained Stock Earnings Assets NRV Accounts Receivable Event Account Titles for Retained Earnings Cash + Bal. + + + + 1. 2 + T + 3 + + 4 + + + + 5. 6. Bal. + + + 0 + + Req D1 Req D2 Req D3 Reg D4 Req D5 Req D6 Prepare an income statement for Year 2. (Round your answers to nearest whole dollar amount.) LEACH INC. Income Statement For the Year Ended December 31, Year 2 Operating expenses Total operating expenses Reg D1 Req D2 Req D3 Reg D4 Reg D5 Reg D6 Prepare the statement of changes in stockholders' equity for Year 2. (Round your answers to nearest whole dollar amount.) LEACH INC. Statement of Changes in Stockholders' Equity For the Year Ended December 31, Year 2 Beginning common stock Ending common stock Beginning retained earnings Ending retained earnings Total stockholders' equity 0 0 $ Reg Di Reg D2 Req D3 Reg D4 Reg D5 Reg D6 Prepare the balance sheet for Year 2. (Round your answers to nearest whole dollar amount.) LEACH INC. Balance Sheet As of December 31, Year 2 Assets 0 $ 0 Total assets Liabilities Stockholders' equity 0 Total stockholders' equity Total liabilities and stockholders' equity $ 0 Reg D1 Reg D2 Req D3 Reg D4 Reg D5 Req D6 Prepare the statement of cash flows for Year 2. (Amounts to be deducted and cash outflows should be indicated with a minus sign.) LEACH INC. Statement of Cash Flows For the Year Ended December 31, Year 2 Cash flows 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 Reg D1 Reg D2 Req D3 Req D4 Reg D5 Req D6 What is the net realizable value of the accounts receivable at December 31, Year 2? (Round your answer to nearest whole dollar amount.) Net realizable value
