Answer:
December 31, 2021
Debit Bad debt expense $5,446
Credit Allowance for doubtful debt $5,446
Being entries to account for receivable that may be incollectible.
May 11, 2022,
Debit Allowance for doubtful debt $1,168
Credit Accounts Receivable $1,168
Being entries that write off receivables due from Jared.
June 12, 2022
Debit Bank/Cash account $1,168
Credit Bad debt account $1,168
Being entries to recognize receivable settled that was previously written off.
Explanation:
When a company makes sales on account/credit, the required entries are debit accounts receivable credit revenue account. On the receipt of cash, credit accounts receivables and debit cash.
However, where the receivable are assessed and the conclusion reached is that they may be incollectible, debit bad debts expense and credit allowance for doubtful debts.
Should the receivables go bad, debit allowance for doubtful debt and credit accounts receivable.
So on December 31, 2021, amount of receivables that may be incollectible
= 7% * $77,800
= $5,446
Entries required are
Debit Bad debt expense $5,446
Credit Allowance for doubtful debt $5,446
Being entries to account for receivable that may be incollectible.
On May 11, 2022, Metlock, Inc. determined that B. Jared’s account was uncollectible and wrote off $1,168
To write it off,
Debit Allowance for doubtful debt $1,168
Credit Accounts Receivable $1,168
Being entries that write off receivables due from Jared.
On June 12, 2022, Jared paid the amount previously written off
Since the amount had been completely written off the accounts receivable, the entries required are
Debit Bank/Cash account $1,168
Credit Bad debt account $1,168
Being entries to recognize receivable settled that was previously written off.
