Answer and Explanation:
The Journal Entry is shown below:-
1. Cash Dr, $138,526
Discount on sales Dr, $1,974
$65,800 × 3%
To account receivable $140,500
(Being cash received on accounts receivable is recorded)
2. Accounts receivable Dr, $5,500
To Allowance for doubtful debts $5,500
{Being cash received against accounts receivable written off is recorded)
3. Allowance for doubtful debts Dr, $20,600
To Accounts receivable $20,600
(Being accounts receivable written off is recorded)
4. Bad debts Dr, $17,800
To Allowance for doubtful debts $17,800
(Being Allowance for doubtful debts created for bad debts is recorded)
Working Note for 4th entry
Allowance for doubtful debts
Particulars Amount Particulars Amount
To accounts receivable $20,600 By balance b/d 20,400
By account receivable $5500
to balance $23,100 By bad debts $17,800
Total $43,700 Total $43,700
