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27 December, 20:26

The balance sheet of Indigo Company at December 31, 2019, includes the following. Notes receivable $54,600 Accounts receivable 191,700 Less: Allowance for doubtful accounts 26,300 $220,000 Transactions in 2020 include the following. 1. Accounts receivable of $147,000 were collected including accounts of $64,400 on which 2% sales discounts were allowed. 2. $5,620 was received in payment of an account which was written off the books as worthless in 2019. 3. Customer accounts of $26,500 were written off during the year. 4. At year-end, Allowance for Doubtful Accounts was estimated to need a balance of $26,900. This estimate is based on an analysis of aged accounts receivable.

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  1. 27 December, 21:08
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    Prepare the journal entries for above accounts

    Explanation:

    1. Cash Dr. 147,000

    Sales Discount Dr. 1,314

    A/R Cr. 148,314

    2. Account Receivable Dr. 5,620

    Disallowance for Bad debts Cr. 5,620

    3. Allowance for Doubtful Accounts Dr. 26,900

    Account Receivable Cr. 26,900

    4. Bad Debts Expense Dr. 26,900

    Allowance for Doubtful Accounts Cr. 26,900
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