Leach Inc. experienced the following events for the first two years of its opera
ID: 2597642 • Letter: L
Question
Leach Inc. experienced the following events for the first two years of its operations 2018: 1. Issued $10,000 of common stock for cash. 2. Provided $80,000 of services on account. 3. Provided $33,000 of services and received cash. 4. Collected $47,000 cash from accounts receivable. 5. Paid $22,000 of salaries expense for the year. 6. Adjusted the accounting records to reflect uncollectible accounts expense for the year. Leach estimates that 8 percent of the ending accounts receivable balance will be uncollectible. 2019: . Wrote off an uncollectible account for $700. 2. Provided $100,000 of services on account. 3. Provided $25,000 of services and collected cash. 4. Collected $82,000 cash from accounts receivable. 5. Paid $30,000 of salaries expense for the year. 6. Adjusted the accounts to reflect uncollectible accounts expense for the year. Leach estimates that8 percent of the ending accounts receivable balance will be uncollectibleExplanation / Answer
Allowance for uncollectible accounts = $50300 x 8% = $4024
Uncollectible accounts expense = $4024 - ($2640 - $700) = $2084
Net realizable value: $46276
Net realizable value of accounts receivable at December 31, 2019 = Accounts receivable $50300 - Allowance for uncollectible accounts $4024 = $46276
LEACH INC. Accounting Equation for the Year 2019 Event Assets = Liabilities + Equity Accounting Titles for RetainedEarnings Cash + Accounts Receivable - Allowance Common Stock + Retained Earnings Bal. 68000 + 33000 - 2640 = + 10000 + 88360 1 + -700 - -700 = + + NA 2 + 100000 - = + + 100000 Service revenue 3 25000 + - = + + 25000 Service revenue 4 82000 + -82000 - = + + NA 5 -30000 + - = + + -30000 Salaries expense 6 + - 2084 = + + -2084 Uncollectible accounts expense Bal. 145000 + 50300 - 4024 = 0 + 10000 + 181276
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