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Exercise $7-7$A $($Algo$)$ Effect of recognizing uncollectible accounts on the financial statements: Percent of receivables allowance method LO $7-2$

$[$The following information applies to the questions displayed below.$]$

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

Year $1$:

$1.$ Issued $\backslash (\backslash$$ $10,000\backslash )$ of common stock for cash.

$2.$ Provided $\backslash (\backslash$$ $120,000\backslash )$ of services on account.

$3.$ Provided $\backslash (\backslash$$ $31,000\backslash )$ of services and received cash.

$4.$ Collected $\backslash (\backslash$$ $89,000\backslash )$ cash from accounts receivable.

$5.$ Paid $\backslash (\backslash$$ $20,000\backslash )$ 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.

Year $2$:

$1.$ Wrote off an uncollectible account for $\backslash (\backslash$$ $680\backslash ).$

$2.$ Provided $\backslash (\backslash$$ $140,000\backslash )$ of services on account.

$3.$ Provided $\backslash (\backslash$$ $15,000\backslash )$ of services and collected cash.

$4.$ Collected $\backslash (\backslash$$ $122,000\backslash )$ cash from accounts receivable.

$5.$ Paid $\backslash (\backslash$$ $26,000\backslash )$ of salaries expense for the year.

$6.$ Adjusted the accounts to reflect uncollectible accounts expense for the year. Leach estimates that $8$ percent of the ending accounts receivable balance will be uncollectible.

Exercise $7-7$A $($Algo$)$ Part d

d$-1.$ Organize the transaction data in accounts under an accounting equation for Year $2.$

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 $2?\backslash$begin$\{$tabular$\}\{|$l$|$l$|$l$|\}$

$\backslash$hline $\backslash$multicolumn$\{3\}\{|$c$|\}\{$ LEACH INCORPORATED $\}\backslash \backslash$

$\backslash$hline $\backslash$multicolumn$\{2\}\{|$c$|\}\{$ Statement of Cash Flows $\}\backslash \backslash$

$\backslash$hline Cash flows from operating activities & & $\backslash \backslash$

$\backslash$hline & & $\backslash \backslash$

$\backslash$hline & & $\backslash \backslash$

$\backslash$hline & & $\backslash \backslash$

$\backslash$hline Net cash flow from operating activities & & $\backslash (\backslash$$ $\backslash )\backslash \backslash$

$\backslash$hline Cash flows from investing activities & & $\backslash \backslash$

$\backslash$hline Cash flows from financing activities & & $\backslash \backslash$

$\backslash$hline Net change in cash & & $\backslash \backslash$

$\backslash$hline & & $\backslash \backslash$

$\backslash$hline Ending cash balance & & $\backslash (\backslash$$ $\backslash )\backslash \backslash$

$\backslash$hline

$\backslash$end$\{$tabular$\}\backslash$begin$\{$tabular$\}\{|$c$|$c$|$c$|\}$

$\backslash$hline $\backslash$multicolumn$\{3\}\{|$l$|\}\{$LEACH INCORPORATED$\}\backslash \backslash$

$\backslash$hline $\backslash$multicolumn$\{3\}\{|$l$|\}\{$Balance Sheet$\}\backslash \backslash$

$\backslash$hline $\backslash$multicolumn$\{3\}\{|$l$|\}\{$As of December $31,$ Year $2\}\backslash \backslash$

$\backslash$hline Assets & & $\backslash \backslash$

$\backslash$hline & $?$ & $\backslash \backslash$

$\backslash$hline $+$ & & $\backslash \backslash$

$\backslash$hline $$ & & $0\backslash \backslash$

$\backslash$hline Total assets & & $\backslash$$ $0\backslash \backslash$

$\backslash$hline Liabilities & $?$ & $\backslash \backslash$

$\backslash$hline Stockholders' equity & & $\backslash \backslash$

$\backslash$hline P & & $\backslash \backslash$

$\backslash$hline & & $\backslash \backslash$

$\backslash$hline $($ & & $\backslash \backslash$

$\backslash$hline Total stockholders' equity & & $0\backslash \backslash$

$\backslash$hline Total liabilities and stockholders' equity & & $\backslash (\backslash$$ $0\backslash )\backslash \backslash$

$\backslash$hline

$\backslash$end$\{$tabular$\}\backslash$begin$\{$tabular$\}\{|$c$|$c$|$c$|\}$

$\backslash$hline $\backslash$multicolumn$\{3\}\{|$c$|\}\{$LEACH INCORPORATED$\}\backslash \backslash$

$\backslash$hline $\backslash$multicolumn$\{3\}\{|$l$|\}\{$Statement of Changes in Stockholders' Equity$\}\backslash \backslash$

$\backslash$hline $\backslash$multicolumn$\{3\}\{|$l$|\}\{$For the Year Ended December $31,$ Year $2\}\backslash \backslash$

$\backslash$hline Beginning common stock & & $\backslash \backslash$

$\backslash$hline & & $\backslash \backslash$

$\backslash$hline Ending common stock & $\backslash$$ & $0\backslash \backslash$

$\backslash$hline Beginning retained earnings & & $\backslash \backslash$

$\backslash$hline Plus: Net income & & $\backslash \backslash$

$\backslash$hline Ending retained earnings & & $0\backslash \backslash$

$\backslash$hline Total stockholders' equity & $\backslash$$ & $0\backslash \backslash$

$\backslash$hline

$\backslash$end$\{$tabular$\}$

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