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24 May, 14:30

During 2021, its first year of operations, Pave Construction provides services on account of $124,000. By the end of 2021, cash collections on these accounts total $92,000. Pave estimates that 30% of the uncollected accounts will be uncollectible. In 2022, the company writes off uncollectible accounts of $8,640. Required: 1. Record the adjusting entry for uncollectible accounts on December 31, 2021

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  1. 24 May, 15:18
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    The adjusting entry for uncollectible accounts on December 31, 2021:

    Debit Bad debts expense $9,600

    Credit Allowance for uncollectible accounts $9,600

    Explanation:

    During 2021, Pave Construction provides services on account of $124,000. By the end of 2021, cash collections on these accounts total $92,000.

    The balance of uncollected accounts on December 31, 2021 = $124,000 - $92,000 = $32,000

    Pave estimates that 30% of the uncollected accounts will be uncollectible.

    Estimated uncollectible = 30% x $32,000 = $9,600

    The adjusting entry for uncollectible accounts on December 31, 2021:

    Debit Bad debts expense $9,600

    Credit Allowance for uncollectible accounts $9,600
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Home » Business » During 2021, its first year of operations, Pave Construction provides services on account of $124,000. By the end of 2021, cash collections on these accounts total $92,000. Pave estimates that 30% of the uncollected accounts will be uncollectible.
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