Exercise 5-7 (Algo) Establish an allowance for uncollectible accounts and write off accounts receivable
(LO5-3, 5-4)
During 2024, its first year of operations, Riley Construction provides services on account of $120,000. By the end of 2024, cash
collections on these accounts total $90,000. Riley estimates that 20% of the uncollected accounts will be uncollectible. In 2025, the
company writes off uncollectible accounts of $5,400.
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).
3-a. Assume the same facts as above but assume actual write-offs in 2025 were $8,100. 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).