Leach Inc. experienced the following events for the first two years of its opera

Question

Leach Inc. experienced the following events for the first two years of its operations: 2016:

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.

2017:

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.

Required

a. Record the 2016 and 2017 events in general journal form and post them to T-accounts. (If no entry is required for a transaction/event, select "No journal entry required" in the first account field.)

b. Prepare the income statement, statement of changes in stockholders’ equity, balance sheet, and statement of cash flows for 2016 and 2017. (Statement of Cash Flows and Balance Sheet only: Items to be deducted must be indicated with a minus sign.)

c. What is the net realizable value of the accounts receivable at December 31, 2016 and Dec. 31. 2017?

Explanation / Answer

a. In the books of Leach Inc.

Contd.

b. Income Statement

For the year ended December 31

Statement of Cash Flows

For the year ended December 31

Balance Sheet

December 31

c. Net Realizable Value of Accounts Receivable :

Transaction / Event Account Titles Debit Credit 2016 $ $ 1. Cash 10,000 Common Stock 10,000 2. Accounts Receivable 78,000 Service Revenue 78,000 3. Cash 36,000 Service Revenue 36,000 4. Cash 69,000 Accounts Receivable 69,000 5. Salaries Expense 38,000 Cash 38,000 6. Uncollectible Accounts Expense 450 Allowance for Uncollectible Accounts 450

Related Questions

Navigate

• Browse (All)
• Browse L
• Subjects

---

---

Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.