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 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 uncollectible

Explanation / Answer

Uncollectible accounts expense = $33000 x 8% = $2640

LEACH INC. Accounting Equation for the Year 2018 Event Assets = Liabilities + Equity Accounting Titles for Retained
Earnings Cash + Accounts Receivable - Allowance Common Stock + Retained Earnings 1 10000 + - = + 10000 + NA 2 + 80000 - = + + 80000 Service revenue 3 33000 + - = + + 33000 Service revenue 4 47000 + -47000 - = + + NA 5 -22000 + - = + + -22000 Salaries expense 6 + - 2640 = + + -2640 Uncollectible accounts expense Bal. 68000 + 33000 - 2640 = 0 + 10000 + 88360

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