Question

Exercise 7-7A 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 Inc. experienced the following events for the first two years of its operations: Year 1: Issued $29,000 of common stock for cash. Provided $98,900 of services on account. Provided $55,000 of services and received cash. Collected $88,000 cash from accounts receivable. Paid $57,000 of salaries expense for the year. 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. Closed the revenue account. Closed the expense account. Year 2: Wrote off an uncollectible account for $840. Provided $107,000 of services on account. Provided $51,000 of services and collected cash. Collected $100,000 cash from accounts receivable. Paid $84,000 of salaries expense for the year. 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 c c. What is the net realizable value of the accounts receivable at December 31, Year 1?

	Net realizable value

Answer 1