Question

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

1. Issued $12,000 of common stock for cash.

2. Provided $80,200 of services on account.

3. Provided $38,000 of services and received cash.

4. Collected $71,000 cash from accounts receivable.

5. Paid $40,000 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 $660.

2. Provided $90,000 of services on account.

3. Provided $34,000 of services and collected cash.

4. Collected $83,000 cash from accounts receivable.

5. Paid $67,000 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.