Peakhurst Limited had the following trial balance at 1 January 2016:

You are given the following additional information for the year ended 31 December 2016:

a. Bad debts of $8000 were written off.

b. It was decided that allowance for doubtful debts should be 4 per cent of accounts receivable.

Required:
1. Prepare journal entries for these transactions.
2. Show the ledger accounts for the following for the year ended 31 December 2016:

a. Accounts receivable

b. Allowance for doubtful debts

c. Bad debts expense

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Cash Accounts receivable Inventory Prepaid insurance Debit $ 200000 600 000 700000 60000 Credit $ Prepaid rent 50000 Equipment 1.000.000 Allowance for doubtful debts 20000 Accumulated depreciation 200000 Accounts payable Revenue received in advance Income tax payable Loan 500000 100000 500000 570000 Share capital 400000 Retained profits 320000 2610000 2610000