Question

Leach Inc. experienced the following events for the first two years of its operations: 2018: Issued...

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

2018:

  1. Issued $10,000 of common stock for cash.
  2. Provided $80,000 of services on account.
  3. Provided $33,000 of services and received cash.
  4. Collected $47,000 cash from accounts receivable.
  5. Paid $14,000 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.

2019:

  1. Wrote off an uncollectible account for $670.
  2. Provided $100,000 of services on account.
  3. Provided $25,000 of services and collected cash.
  4. Collected $82,000 cash from accounts receivable.
  5. Paid $28,000 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

  1. Organize the transaction data in accounts under an accounting equation. (Enter any decreases to account balances with a minus sign. If there is no effect on the Accounts Titles for Retained Earnings, leave the cell blank.)
LEACH INC.
Accounting Equation for the Year 2018
Event Assets = Liabilities + Equity Accounting Titles for Retained Earnings
Cash + Accounts Receivable – Allowance Common stock + Retained Earnings
1. + – = + +
2. + – = + +
3. + – = + +
4. + – = + +
5. + – = + +
6. + – = + +
Bal. 0 + 0 – 0 = 0 + 0 + 0
Business   Accounting   
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Homework Answers

Answer #1
  • Requirement [a]

LEACH INC.

Accounting Equation for the Year 2018

Event

Assets

=

Liabilities

+

Equity

Accounting Titles for Retained Earnings

Cash

+

Accounts Receivable

–

Allowance

Common stock

+

Retained Earnings

1

$10,000

+

–

=

+

$10,000

+

2

+

$80,000

–

=

+

+

$80,000

Service Revenue

3

$33,000

+

–

=

+

+

$33,000

Service Revenue

4

$47,000

+

($47,000)

–

=

+

+

5

($14,000)

+

–

=

+

+

($14,000)

Salaries expense

6

+

–

$1,650 [33000 x 5%]

=

+

+

($1,650)

Bad Debt Expense

Bal.

$76,000

+

$33,000

$1,650

$0

$10,000

$97,350

0 0
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