Requlred Information

Exercise $7\mathrm{.}7$A $($Algo$)$ 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 Incorporated experienced the following events for the first two years of its operations.

Year $1$:

Issued $$16,000$ of common stock for cash.

Provided $$84,600$ of services on account.

Provided $$42,000$ of services and received cash.

Collected $$75,000$ cash from accounts receivable.

Paid $$44,000$ of salaries expense for the year.

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.

Closed the revenue account.

Closed the expense accounts.

Year $2$:

Wrote off an uncollectible account for $$950.$

Provided $$94,000$ of services on account.

Provided $$38,000$ of services and collected cash.

Collected $$87,000$ cash from accounts receivable.

Paid $$71,000$ of salaries expense for the year.

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.

Closed the revenue account.

Closed the expense accounts.

Exerclse $7-7$A $($Algo$)$ Part a

Requlred

a$.$ Record the Year $1$ events in general journal form and post them to T$-$accounts.

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Post the Year $1$ events to T$-$accounts.