During 2024, its first year of operations, Pave Construction provides services on account of $160,000. By the end of 2024, cash collections on these accounts total $110,000. Pave estimates that 25% of the uncollected accounts will be uncollectible. In 2025, the company writes off uncollectible accounts of $10,000. Required: 1. Record the adjusting entry for uncollectible accounts on December 31, 2024. 2-a. Record the write-off of accounts receivable in 2025. 2-b. Calculate the balance of Allowance for Uncollectible Accounts at the end of 2025 (before adjustment in 2025).
Exercise 5-7 (Static) Establish an allowance for uncollectible accounts and write off accounts receivable (LO5-3,5-4)
During 2024, its first year of operations, Pave Construction provides services on account of $160,000. By the end of 2024, cash collections on these accounts total $110,000. Pave estimates that 25% of the uncollected accounts will be uncollectible. In 2025, the company writes off uncollectible accounts of $10,000.
Required:
1. Record the
2-a. Record the write-off of accounts receivable in 2025.
2-b. Calculate the balance of Allowance for Uncollectible Accounts at the end of 2025 (before adjustment in 2025).
3-a. Assume the same facts as above but assume actual write-offs in 2025 were $15,000. Record the write-off of accounts receivable in 2025.
3-b. Calculate the balance of Allowance for Uncollectible Accounts at the end of 2025 (before adjustment in 2025).
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