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19 August, 01:01

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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  1. 19 August, 01:56
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    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)
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