Question

During 2021, its first year of operations, Pave Construction provides services on account of $144,000. By...

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).

Homework Answers

Answer #1

1) Adjusting entry

Date account and explanation Debit Credit
Dec 31,2021 bad debt expense (42000*20%) 8400
Allowance for doubtful accounts 8400
(To record bad debt expense)

2a) Journal entry

Date account and explanation Debit Credit
2022 Allowance for doubtful accounts 7560
Account receivable 7560
(To record write off)

2b) Balance in allowance for doubtful accounts = 8400-7560 = 840

3a) Journal entry

Date account and explanation Debit Credit
2022 Allowance for doubtful accounts 11340
Account receivable 11340
(To record write off)

3b) Balance in allowance for doubtful accounts = 8400-11340 = 2940 Debit balance

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