Question

During 2021, its first year of operations, Pave Construction provides services on account of $144,000. By the end of 2021, cash collections on these accounts total $102,000. Pave estimates that 20% of the uncollected accounts will be uncollectible. In 2022, the company writes off uncollectible accounts of $7,560.Required:1. Record the adjusting entry for uncollectible accounts on December 31, 2021.2-a. Record the write-off of accounts receivable in 2022.2-b. Calculate the balance of Allowance for Uncollectible Accounts at the end of 2022 (before adjustment in 2022).3-a. Assume the same facts as above but assume actual write-offs in 2022 were $11,340. Record the write-off of accounts receivable in 2022.3-b. Assume the same facts as above but assume actual write-offs in 2022 were $11,340. Calculate the balance of Allowance for Uncollectible Accounts at the end of 2022 (before adjustment in 2022).

Answer 1

Answer:

1 ) Debit Allowance for uncollectible accounts Adjustment $8,400 Credit Allowance for uncollectible accounts $8,400

2 a) Debit Doubtful Debt $7,560 Credit Accounts Receivable $7,560

b) Allowance for uncollectible accounts balance = $6,888

3 a) Debit Doubtful Debt $11,340 Credit Accounts Receivable $11,340

 b) Allowance for uncollectible accounts balance = $6,132

Explanation:

2021

Uncollected balance = $144,000- $102,000 = $42,000

Allowance for uncollectible Accounts = $42,000*20% = 8,400

2 b) Uncollectible accounts balance = $42,000- $7,560 =$34,440 *20%

                                                                                     = $6,888

3 b) Uncollectible accounts balance = $42,000 - $11,340

                                                     =30,660*20%

                                                     =$6,132