Question

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

2019:
Wrote off an uncollectible account for $700.
Provided $110,000 of services on account.
Provided $25,000 of services and collected cash.
Collected $92,000 cash from accounts receivable.
Paid $30,000 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.

Organize the transaction data in accounts under an accounting equation.

Answer 1

To organize the transaction data in accounts under an accounting equation, we need to understand the basic components of the accounting equation. The accounting equation is Assets = Liabilities + Equity.

Step-by-step explanation:

To organize the transaction data in accounts under an accounting equation, we need to understand the basic components of the accounting equation. The accounting equation is Assets = Liabilities + Equity. Assets are the resources owned by the company, liabilities are the company's obligations, and equity is the owner's claim to the assets. Based on the provided events, we can organize the transaction data as follows:

1. 2019: Wrote off an uncollectible account for $700. This will reduce the accounts receivable (asset) and increase the uncollectible accounts expense (expense).
2. Provided $110,000 of services on account. This will increase the accounts receivable (asset) and increase the revenue (equity).
3. Provided $25,000 of services and collected cash. This will increase the cash (asset) and increase the revenue (equity).
4. Collected $92,000 cash from accounts receivable. This will decrease the accounts receivable (asset) and increase the cash (asset).
5. Paid $30,000 of salaries expense for the year. This will decrease the cash (asset) and decrease the equity (expense).
6. Adjusted the accounts to reflect uncollectible accounts expense for the year. This will increase the uncollectible accounts expense (expense) and decrease the equity (expense).