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Requlred Informatlon Exercise 7 . 7 A ( Algo ) Effect of recognizing uncollectible accounts on the financial statements: percent of receivables allowance method L

Requlred Informatlon
Exercise 7.7A (Algo) Effect of recognizing uncollectible accounts on the financial statements: percent of
receivables allowance method LO7*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 7-7A (Algo) Part b
b. Prepare the income statement, statement of changes in stockholders' equity, balance sheet, and statement of cash flows for Year 1.
Complete this question by entering your answers in the tabs below.
Req B2
Prepare the income statement for Year 1.
LEACH INCORPORATED
Income Statement
For the Year Ended December 31. Year 1
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