Answer:
1. Record the adjustment for uncollectible accounts on December 31, 2018.
Dr Bad debt expense 10,250
Cr Allowance for doubtful accounts 10,250
Allowance for doubtful accounts is a contra asset account that reduces the amount of accounts receivable and has a credit balance.
2. Calculate the net realizable value of accounts receivable.
net realizable value of accounts receivable = total accounts receivable - allowance for doubtful accounts = $41,000 - $10,250 = $30,750
Explanation:
total services on account $142,000
cash collected $101,000, remaining accounts receivable $41,000
25% of remaining accounts receivable will be uncollectible = $41,000 x 25% = $10,250 in bad debts
