Question

Required information

Skip to question

[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 $10,000 of common stock for cash.
2. Provided $78,000 of services on account.
3. Provided $36,000 of services and received cash.
4. Collected $69,000 cash from accounts receivable.
5. Paid $38,000 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 $650.
2. Provided $88,000 of services on account.
3. Provided $32,000 of services and collected cash.
4. Collected $81,000 cash from accounts receivable.
5. Paid $65,000 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.

Required
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.)
  

Answer 1

a)

No.	Account titles and explanation	Debit	Credit
1.	Cash	$10000
	Common stock		$10000
	(To record common stock issued for cash)
2.	Accounts receivable	$78000
	Service revenue		$78000
	(To record services provide on account)
3.	Cash	$36000
	Service revenue		$36000
	(To record services provided for cash)
4.	Cash	$69000
	Accounts receivable		$69000
	(To record cash collected from accounts receivable)
5.	Salaries expense	$38000
	Cash		$38000
	(To record salaries expense paid)
6.	Uncollectible accounts expense (78000-69000)*5%	$450
	Allowance for doubtful accounts		$450
	(To record uncollectible accounts expense)
7.	Service revenue (78000+36000)	$114000
	Retained earnings		$114000
	(To close revenue account)
8.	Retained earnings (38000+450)	$38450
	Salaries expense		$38000
	Uncollectible accounts expense		$450
	(To close expense account)

Cash					Common Stock
1.	$10000						$10000	1.
3.	36000	38000	5.
4.	69000
End. Bal.	$77000				End. Bal.		$10000
Accounts Receivable					Retained earnings
2.	78000	69000	4.		8.	38450	114000	7.
End. Bal.	$9000				End. Bal.		75550
Service Revenue					Salaries Expense
		78000	2.		5.	38000
		36000	3.
					Bal.	38000
Bal.		114000					38000	8.
7.	114000
End. Bal.		0			End. Bal.	0
Uncollectible accounts expense					Allowance for doubtful accounts
6.	450						450	6.
Bal.	450
		450	8.		End Bal.		$450
End. Bal.	0

NOTE:- Please rate the answer and for any problem regarding the answer please ask in the comment section.