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Exercise 7-7A Effect of recognizing uncollectible accounts on the financial statements: percent of receivables allowance method LO 7-2

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[The following information applies to the questions displayed below.] Leach Inc. experienced the following events for the first two years of its operations: Year 1:

1. Issued $14,000 of common stock for cash.
2. Provided $82,400 of services on account.
3. Provided $40,000 of services and received cash.
4. Collected $73,000 cash from accounts receivable.
5. Paid $42,000 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.
7. Closed the revenue account.
8. Closed the expense account.

Year 2:

1. Wrote off an uncollectible account for $680.
2. Provided $92,000 of services on account.
3. Provided $36,000 of services and collected cash.
4. Collected $85,000 cash from accounts receivable.
5. Paid $69,000 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.

Exercise 7-7A Part d

d. Repeat parts a, b, and c for Year 2. (If no entry is required for a transaction/event, select "No journal entry required" in the first account field. Statement of Cash Flows and Balance Sheet only: Items to be deducted must be indicated with a minus sign. Round your answers to nearest whole dollar.)

Prob Saved Check my work mode : This shows what is correct or incorrect for the Required information LEACH INC. Statement of Cash Flows For the Year Ended December 31, Year 2 Cash flow from operating activities Cash inflow from inventory X $ 58,474 X Cash inflow from customers (6,474) X Cash inflow from sale of land Net cash flow from operating activities $ 52,000 Cash flows from investing activities Cash flows from financing activities Net change in cash 52,000 Plus: Beginning cash balance 85,000 Ending cash balance $ 137,000 Net realizable value

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