Question

Required information [The following information applies to the questions displayed below.] Leach Inc. experienced the following events for the first two years of its operations: 2018: Issued $10,000 of common stock for cash. Provided $70,000 of services on account. Provided $29,000 of services and received cash. Collected $41,000 cash from accounts receivable. Paid $16,000 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. 2019: Wrote off an uncollectible account for $700. Provided $90,000 of services on account. Provided $30,000 of services and collected cash. Collected $72,000 cash from accounts receivable. Paid $26,000 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. I need the end total for accounts receivable after year 2

Answer 1

Accounts receivable is the amount to be received from customer for credit sale. It is recorded as current assets in the balance sheet.
When the company makes credit sale the balance of the accounts receivable increases and when customer makes payment the balance of accounts receivable decreases.
The company also based on its past trends estimates the amount which would be uncollectible from customer which is accumulated in allowance for doubtful debts and is reduced from accounts receivable.
Calculation of accounts receivable balance at end of year 1 (2018)
Beginning Balance	$0
Add: Services provided on credit	$70,000
Less: Cash collection	-$41,000
Ending accounts receivable at year 1, Gross	$29,000
Allowance for doubtful debt (29,000*5%)	$1,450
Ending accounts receivable at year 1, Net	$27,550
Calculation of accounts receivable balance at end of year 2 (2019)
Beginning Balance, Gross	$29,000
Less: Write off of uncollectible account	-$700
Add: Services provided on credit	$90,000
Less : Cash collection in 2019	$72,000
Ending accounts receivable at year 2, Gross	$190,300
Calculation of allowance for doubtful debt balance at end of year 2 (2019)
Beginning Balance of allowance for doubtful debt	$1,450
Less: Write off of uncollectible account	-$700
Add: Current year Bad debts (190,300*5%)	$9,515
Ending balance of allowance for doubtful debt	$10,265
The account written off is customer will not make payment and therefore the accounts receivable is reduce to that extent and also the allowance for doubtful debt will be reduced.
Net realizable value of accounts receivable at end of year 2 (2019)
Ending accounts receivable at year 1, Gross	$190,300
Less : Allowance for doubtful debt	-$10,265
Accounts receivable balance at end of year 2, net	$180,035
The gross accounts receivable at end of year 2 is $190,300 and net accounts receivable at end of year 2 is $180,035