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In: Accounting

Leach Inc. experienced the following events for the first two years of its operations: Year 1:...

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

Year 1:

  1. Issued $17,000 of common stock for cash.
  2. Provided $85,700 of services on account.
  3. Provided $43,000 of services and received cash.
  4. Collected $76,000 cash from accounts receivable.
  5. Paid $45,000 of salaries expense for the year.
  6. Adjusted the accounting records to reflect uncollectible accounts expense for the year. Leach estimates that 4 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 $750.
  2. Provided $95,000 of services on account.
  3. Provided $39,000 of services and collected cash.
  4. Collected $88,000 cash from accounts receivable.
  5. Paid $72,000 of salaries expense for the year.
  6. Adjusted the accounts to reflect uncollectible accounts expense for the year. Leach estimates that 4 percent of the ending accounts receivable balance will be uncollectible.

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

(a. Record the Year 1 events in general journal form and post them to T-accounts. (If no entry is required for a transaction/event, select "No journal entry required" in the first account field.)

b. Prepare the income statement, statement of changes in stockholders’ equity, and balance sheet for Year 1. (Balance Sheet only: Items to be deducted must be indicated with a minus sign.)

)

Solutions

Expert Solution

a)Record the Year 1 events in general journal form and post them to T-accounts. If no entry is required for a transaction/event, select "No journal entry required" in the first account field.

b) Prepare the income statement, statement of changes in stockholders’ equity, and balance sheet for Year 1. Balance Sheet only: Items to be deducted must be indicated with a minus sign.

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