The journal entries are shown below:
On December 31
Bad debt expense Dr $130,000 ($650,000 × 0.20%)
To Allowance for doubtful debts $130,000
(Being the bad debt expense is recorded)
On Feb 01
Allowance for doubtful debts Dr $325
To Account receivable $325
(Being the written off amount is recorded)
On June 5
Account receivable $325
To Allowance for doubtful debts Dr $325
(Being the written off amount is recorded)
On June 5
Cash Dr $325
To Account receivable $325
(Being the cash received is recorded)
