On December 31, 2021, when its Allowance for Doubtful Accounts had a debit balance of $1,534, Indigo Corporation estimates that 8% of its accounts receivable balance of $74,100 will become uncollectible and records the necessary adjustment to Allowance for Doubtful Accounts. On May 11, 2022, Indigo Corporation determined that B. Jared's account was uncollectible and wrote off $1,171. On June 12, 2022, Jared paid the amount previously written off. Prepare the journal entries on December 31, 2021, May 11, 2022, and June 12, 2022.

Question

Willow Bird

Business

10 October, 17:05

On December 31, 2021, when its Allowance for Doubtful Accounts had a debit balance of $1,534, Indigo Corporation estimates that 8% of its accounts receivable balance of $74,100 will become uncollectible and records the necessary adjustment to Allowance for Doubtful Accounts. On May 11, 2022, Indigo Corporation determined that B. Jared's account was uncollectible and wrote off $1,171. On June 12, 2022, Jared paid the amount previously written off. Prepare the journal entries on December 31, 2021, May 11, 2022, and June 12, 2022.

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Vernon · Answer 1

Answer and Explanation:

The Journal Entry is shown below:-

1. Bad debts expense Dr, $7,462

To Allowance for doubtful accounts $7,462

($74,100 * 8%) + $1,534

(Being bad debts expense is recorded)

2. Allowance for doubtful account Dr, $1,171

To Accounts receivable $1,171

(Being allowance for doubtful account is recorded)

3. Accounts receivable Dr, $1,171

To Allowance for doubtful accounts $1,171

(Being accounts receivable is recorded)

Cash account Dr, $1,171

To Accounts receivable $1,171

(Being cash is recorded)