! Required information Exercise 7-7A (Static) 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: 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. 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. Exercise 7-7A (Static) Part a Required a. Organize the transaction data in accounts under an accounting equation. (Enter any decreases to account balances with a minus sign. Not all cells require input.) LEACH INC. Accounting Equation for Year 1 Equity Liabilities Common Retained Stock Earnings Assets NRV Accounts Receivable Event Account Titles for Retained Earnings Cash 1. + = + + + 2. 3. + + + + + 4. 5. + + + + + + ++ ++++ + + 6. Bal. 0 + 0 = 01 + 0 +