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During the year, Redknapp made the following accounting entries to account for the increase in the allowance for receivables: Debit Trade receivables $4,300 Credit Allowance for receivables $4,300 State the journal entries required to account correctly for the increase in the allowance for receivables for the year.
The correct entry should have been to Credit the allowance for receivables and to Debit the irrecoverable and doubtful debts expense account.
So to correct the mistake they need to Credit Trade receivables and Debit the irrecoverable and doubtful debts expense account with $4,300.
Have you watched my free lectures on irrecoverable and doubtful debts? The lectures are a complete free course for Paper FA and cover everything needed to be able to pass the exam well.
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