Answer:
Dr Bad debt expense 20,030
Cr Allowance for doubtful accounts 20,030
Explanation:
first we must determine the net amount of bad debt under direct write off = $17,100 - $2,200 = $14,900
now the increase in the allowance account during 2021 = $22,410 - $17,280 = $5,130
The journal entries following allowance method:
bad debts written off:
Dr Allowance for doubtful accounts 17,100
Cr Accounts receivable 17,100
bad debts recovered:
Dr Accounts receivable 2,200
Cr Allowance for doubtful accounts 2,200
Dr Cash 2,200
Cr Accounts receivable 2,200
Adjustments following allowance method:
recording bad debt expenses (net amount of bad debt + increase in allowance for bad debt account = $14,900 + $5,130)
Dr Bad debt expense 20,030
Cr Allowance for doubtful accounts 20,030
Now we can check:
$17,280 (beginning balance) - $17,100 write offs + $2,200 recoveries + $20,030 bad debt expense = $22,410 which is the ending balance of allowance for doubtful accounts
