Question

During 2018, its first year of operations, Pave Construction provides services on account of $126,000. By the end of 2018, cash collections on these accounts total $93,000. Pave estimates that 20% of the uncollected accounts will be bad debts. Required: a. Record the adjustment for uncollectible accounts on December 31, 2018.b. Calculate the net realizable value of accounts receivable.

Answer 1

Answer: Please see answer in the explanation column

Explanation:

Account receivables = Total account - cash collections

                                         $126,000 -- $93,000

                                  = $33,000

Uncollectible Accounts = 20% x 33,000 = $6,600

a) Journal to record the adjustment for uncollectible accounts

Date                  Account                       Debit                Credit

Dec 31, 2018   Bad debts expense   $6,600  

Allowance for uncollectible accounts                          $6,600

B) net realizable value of accounts receivable= Total Accounts Receivable - Allowance for uncollectible accounts

= $33,000 - $6,600= $26400