Answer and Explanation:
The Journal entry is shown below:-
1. Cash Dr, $136,800
Sales Discount Dr, $1,200 ($60000 × 2%)
To Accounts receivable $138,000
(Being cash and sales discount is recorded)
For recording this we debited the cash as it increased the assets and at the same time it reduced the assets so account receivable is credited and the sales discount is also debited
2. Accounts receivable Dr, $5,300
To Allowance for doubtful accounts $5,300
(Being allowance for doubtful debts is recorded)
For recording this we debited the account receivable as it increased the assets and at the same time it reduced the assets so allowance for doubtful accounts is credited
Cash Dr, $5,300
To Accounts receivable $5,300
(Being cash receipts is recorded)
For recording this we debited the cash as it increased the assets and at the same time it reduced the assets so account receivable is credited
3. Allowance for doubtful accounts Dr, $17,500
To Accounts receivable $17,500
(Being written off amount is recorded)
For recording this we debited the allowance for doubtful debts as it increased the assets and at the same time it reduced the assets so account receivable is credited
4 Bad Debts expense $14,900 ($20,000 - ($17,300 + $5,300 - $17,500)
To Allowance for doubtful accounts $14,900
(Being bad debt expense is recorded)
For recording this we debited the bad debt expense as it increased the expenses and at the same time it reduced the assets so allowance for doubtful debt is credited
