Case 2

1) Gem Merchandise cos Account receivable has a debt balance of $100,000 at June 30,2018. It anticipates that approximately $2000 of this is not likely to turn to cash and, As the result, it report a credit balance of $2000 in allowance for Doubtful account

Required

explain what kind of account is provision for doubtful debt expense

prepare journal entry for the transaction on 30 June 2018

2) Gem Merchandise cos Account receivable has a debt balance of $100,000 at June 30,2018. It anticipates that approximately $2000 of this is not likely to turn to cash and, As the result, it report a credit balance of $2000 in allowance for Doubtful account. Now assume that one of company that it has receivable account worth of $14000 has gon bankrupts on 15 July 2018 and the amont will not be recovered at all

Required

a) prepare Journal entry for the transaction on 15 July 2018