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

Year 1:

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.

Year 2:

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.

a Organize the transaction data in accounts under an accounting equation.

b Prepare the income statement, statement of changes in stockholders equity, balance sheet, and statement of cash flows for Year 1.

c What is the net realizable value of the accounts receivable at December 31, Year 1?

d-1 Organize the transaction data in accounts under an accounting equation.

d-2. Prepare an income statement for Year 2.

d-3. Prepare the statement of changes in stockholders' equity for Year 2.

d-4. Prepare the balance sheet for Year 2.

d-5. Prepare the statement of cash flows for Year 2.

d-6. What is the net realizable value of the accounts receivable at December 31, Year 2?

Organize the transaction data in accounts under an accounting equation. (Enter any decreases to account balances with a minus sign. If there is no effect on the Accounts Titles for Retained Earnings, leave the cell blank. Not all cells will require entry.)

A.

	LEACH INC. Accounting Equation for the Year Year 1 Event Assets = Liabilities + Equity Accounting Titles for Retained Earnings Cash + NRV Accounts Receivable Common Stock + Retained Earnings 1. + = + + 2. + = + + 3. + = + + 4. + = + + 5. + = + + 6. + = + + Bal. 0 + 0 = 0 + 0 + 0

B.

Prepare the income statement for Year 1.

	LEACH INC. Income Statement For the Year Ended December 31, Year 1 Operating expenses Total operating expenses 0

Prepare the statement of changes in stockholders' equity for Year 1.

	LEACH INC. Statement of Changes in Stockholders Equity For the Year Ended December 31, Year 1 Beginning common stock Ending common stock $0 Beginning retained earnings Ending retained earnings 0 Total stockholders equity $0

Prepare the balance sheet for Year 1.

	LEACH INC. Balance Sheet As of December 31, Year 1 Assets 0 Total assets $0 Liabilities Stockholders equity Total stockholders equity 0 Total liabilities and stockholders equity $0

Prepare the balance sheet for Year 1.

	LEACH INC. Balance Sheet As of December 31, Year 1 Assets 0 Total assets $0 Liabilities Stockholders equity Total stockholders equity 0 Total liabilities and stockholders equity $0

C

What is the net realizable value of the accounts receivable at December 31, Year 1?

	Net realizable value

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