Question

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.

Answer 1

Prepare the journal entries for above accounts

Step-by-step 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