Answer:
Fraud Investigators Inc.
Journal entries
Mar 31.
Debit Accounts Receivable Account with $17,000
Credit Revenue with $17,000
(Being Revenue on detection service in 10 clients sites)
October 31
Debit Bad debt Account with $1,100
Credit Accounts Receivables Account with $1,100
(Being Bad debts on Prior periods Payables balance not recoverable & written off)
December 15
Debit Cash $720
Credit Bad debt recovered Account with $720
(Being bad debt previously written off in prior years now recovered)
December 31
Debit Bad debts Account with $420
Credit Bad debts Provision Account with $420
(Being provision of Bad debt based on Accounts Receivable balance at year end)
Explanation:
Bad debt are Accounting provisions made with respect to the Accounts receivable Balance and the Ageing of these Balances.
The older a debt is, the more likely customers will default. For this reason and considering the Prudence concepts firms are expected to appraise their Receivables position and make provisions for bad debts.
Fraud Investigators Inc.
Journal entries
Mar 31.
Debit Accounts Receivable Account with $17,000
Credit Revenue with $17,000
(Being Revenue on detection service in 10 clients sites)
October 31
Debit Bad debt Account with $1,100
Credit Accounts Receivables Account with $1,100
(Being Bad debts on Prior periods Payables balance not recoverable & written off)
December 15
Debit Cash $720
Credit Bad debt recovered Account with $720
(Being bad debt previously written off in prior years now recovered)
December 31
Debit Bad debts Account with $420
Credit Bad debts Provision Account with $420
(Being provision of Bad debt based on Accounts Receivable balance at year end)