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

Cash

Accounts receivable Inventory

Prepaid insurance

Prepaid rent

Equipment

Allowance for doubtful debt Accumulated depreciation Accounts payable

Revenue received in advance Income tax payable

Loan

Share capital

Retained profits

Debit $

200 000 600 000 700 000 60 000 50 000

1 000 000

Credit $

20 000 200 000 500 000 100 000 500 000 570 000 400 000 320 000 2 610 000

2 610 000

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

1. a)Bad debts of $8000 were written off.
2. b)It was decided that allowance for doubtful debts should be 4 per cent of accounts receivable.

Required:

1. 1)Prepare journal entries for these transactions. (4 marks)
2. 2)Show the T-ledger accounts for the following for the year ended 31 December 2016:
3. a)accounts receivable (2 marks)
4. b)allowance for doubtful debts (2 marks)
5. c)bad debts expense (2 marks)