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Hi slaughterofsoul
Here is the solution to your question:To find:charge to the income statement for irrecoverable and doubtful debts(IDE)
Receivables at the beginning of the year=87,000(ignore this amount because it a balance sheet item)
Allowance for receivables at the beginning of the year=$2500(it will on the credit side in allowance for receivable account)
Two specific debts written off (irrecoverable debts)=800+550=$1350
(This amount will be shown on the debit side of the irrecoverable and doubtful debt account),secondly(last year this amount was already included in $2500 as doubtful debt but our closing provision is already adjusted so no need to make any adjustment in provision for receivable accoünt,just straight away charge it as a bad debt expense in irrecoverable and doubtful debt account)Debt recovered =$350
(This amount will be shown on credit side of irrecoverable and doubtful debt account)
(last year this amount was already included in $2500 as doubtful debt but our closing provision is already adjusted so no need to make any adjustment in provision for receivable account,just straight away show it a decrease in expense on the credit side in irrecoverable and doubtful debt account)Closing provision for doubtful debt=$2300
(There is decrease in provision by $200 i.e $2500-2300and will be shown on credit side of Irrecoverable and doubtful debt account.e decrease in expense)
(Remember the amount $2300 is already adjusted i.e it will not include bad debt amount of $800 and $350 and debt recovered amount $350 so we no need to adjust this)
NOW:in Irrecoverable and doubtful debt account:
Irrecoverable debts =800+350= 1350(debit side)
LESS:debts recovered= (350)(Credit side)
LESS:Decrease in allowance for receivables= (200)(Credit side)
Total charge= 800(this amount will be charge to the income statement)
closing receivables =$90,000(ignore this amount because it is a balance sheet item)