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During 2021, its first year of operations, Pave Construction provides services on account of $120000. By the end of 2021, cash collections on these accounts total $90000. Pave estimates that 20% of the uncollected accounts will be uncollectible. In 2022, the company writes off uncollectible accounts of $5400. Required: 1. Record the adjusting entry for uncol

A. December 31, 2021

Dr Bad debt expense $6,000

Cr Allowance for uncollectible accounts $6,000

B. 12/31

Dr  Allowance for Uncollectible accounts $5,400

Cr Account receivable $5,400

C. $24,000

Explanation:

A. Preparation of journal entry to record  the adjustment for uncollectible accounts on December 31 2021

December 31, 2021

Dr Bad debt expense $6,000

Cr Allowance for uncollectible accounts $6,000

($120000-$90000*20%)

(Being to record  the adjustment for uncollectible accounts)

B. Preparation of the journal entry to Record the write offs of accounts receivables in 2022

12/31

Dr  Allowance for Uncollectible accounts $5,400

Cr Account receivable $5,400

(Being to Record the write offs of accounts receivables)

C. Calculation for the net realizable value of accounts receivable.

Total accounts receivable $30,000

($120,000-$90,000)

Less: Allowance for uncollectible accounts ($6,000)

Net realizable value $24,000

Therefore the net realizable value of accounts receivable will be $24,000

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