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rosijanka [135]
2 years ago
10

During 2018, its first year of operations, Pave Construction provides services on account of $154,000. By the end of 2018, cash

collections on these accounts total $107,000. Pave estimates that 25% of the uncollected accounts will be bad debts. Record the adjustment for uncollectible accounts on December 31, 2018.
Business
1 answer:
seraphim [82]2 years ago
6 0

Answer:

Bad debts expenses                                        Debit                $ 11,750

Allowance for uncollectible receivables        Credit                                $ 11,750

Explanation:

The allowance for uncollectible accounts receivables balances are calculated as a percentage of the receivable balance.

The receivable balances as at December 31, 2018 is

Services provided on account                          $  154,000

Cash collections received                                 <u>$  107,000</u>

Receivables from services uncollected           <u>$    47,000</u>

Estimated percentage considered uncollectible     25 %

Allowance for uncollectible accounts   $ 47,000 * 25 % = $ 11,750

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