! Required information Exercise 7-7A (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 $10,000 of common stock for cash. 2. Provided $70,000 of services on account. 3. Provided $31,000 of services and received cash. 4. Collected $39,000 cash from accounts receivable. 5. Paid $20,000 of salaries expense for the year. 6. Adjusted the accounting records to reflect uncollectible accounts expense for the year. Leach estimates that 6 percent of the ending accounts receivable balance will be uncollectible. Year 2: 1. Wrote off an uncollectible account for $2,600. 2. Provided $90,000 of services on account. 3. Provided $30,000 of services and collected cash. 4. Collected $72,000 cash from accounts receivable. 5. Paid $26,000 of salaries expense for the year. 6. Adjusted the accounts to reflect uncollectible accounts expense for the year. Leach estimates that 6 percent of the ending accounts receivable balance will be uncollectible. Exercise 7-7A (Algo) Part c c. What is the net realizable value of the accounts receivable at December 31, Year 1? Net realizable value
! Required information Exercise 7-7A (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 $10,000 of common stock for cash. 2. Provided $70,000 of services on account. 3. Provided $31,000 of services and received cash. 4. Collected $39,000 cash from accounts receivable. 5. Paid $20,000 of salaries expense for the year. 6. Adjusted the accounting records to reflect uncollectible accounts expense for the year. Leach estimates that 6 percent of the ending accounts receivable balance will be uncollectible. Year 2: 1. Wrote off an uncollectible account for $2,600. 2. Provided $90,000 of services on account. 3. Provided $30,000 of services and collected cash. 4. Collected $72,000 cash from accounts receivable. 5. Paid $26,000 of salaries expense for the year. 6. Adjusted the accounts to reflect uncollectible accounts expense for the year. Leach estimates that 6 percent of the ending accounts receivable balance will be uncollectible. Exercise 7-7A (Algo) Part c c. What is the net realizable value of the accounts receivable at December 31, Year 1? Net realizable value
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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![!
Required information
Exercise 7-7A (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 $10,000 of common stock for cash.
2. Provided $70,000 of services on account.
3. Provided $31,000 of services and received cash.
4. Collected $39,000 cash from accounts receivable.
5. Paid $20,000 of salaries expense for the year.
6. Adjusted the accounting records to reflect uncollectible accounts expense for the year. Leach estimates that 6 percent
of the ending accounts receivable balance will be uncollectible.
Year 2:
1. Wrote off an uncollectible account for $2,600.
2. Provided $90,000 of services on account.
3. Provided $30,000 of services and collected cash.
4. Collected $72,000 cash from accounts receivable.
5. Paid $26,000 of salaries expense for the year.
6. Adjusted the accounts to reflect uncollectible accounts expense for the year. Leach estimates that 6 percent of the
ending accounts receivable balance will be uncollectible.
Exercise 7-7A (Algo) Part c
c. What is the net realizable value of the accounts receivable at December 31, Year 1?
Net realizable value](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2Fd1de6e49-d0e6-4b63-8e2c-8fae04076b6a%2F6b19ded7-3fcc-45ec-9d4a-6dd18b07b06d%2Fuujowco_processed.png&w=3840&q=75)
Transcribed Image Text:!
Required information
Exercise 7-7A (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 $10,000 of common stock for cash.
2. Provided $70,000 of services on account.
3. Provided $31,000 of services and received cash.
4. Collected $39,000 cash from accounts receivable.
5. Paid $20,000 of salaries expense for the year.
6. Adjusted the accounting records to reflect uncollectible accounts expense for the year. Leach estimates that 6 percent
of the ending accounts receivable balance will be uncollectible.
Year 2:
1. Wrote off an uncollectible account for $2,600.
2. Provided $90,000 of services on account.
3. Provided $30,000 of services and collected cash.
4. Collected $72,000 cash from accounts receivable.
5. Paid $26,000 of salaries expense for the year.
6. Adjusted the accounts to reflect uncollectible accounts expense for the year. Leach estimates that 6 percent of the
ending accounts receivable balance will be uncollectible.
Exercise 7-7A (Algo) Part c
c. What is the net realizable value of the accounts receivable at December 31, Year 1?
Net realizable value
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