Watts Ltd uses the allowance method of recording bad debts and had a credit balance of $8,000 in the Allowance for Doubtful Debts account on 1 December 2016. The following transactions occurred in December 2016 and January 2017:

18 Dec 2016Watts Ltd wrote off a total of $12,800 accounts receivable as uncollectable.

31 Dec 2016Watts Ltd conducted an ageing analysis of Accounts receivable at the end of financial year 2016. The analysis reveals that the Allowance for Doubtful Debts account should have a credit balance of $11,000 as at 31 December. (Hint: an adjustment to the Allowance for Doubtful Debts account is required).

18 Jan 2017A cheque for $800 is received from A. Morris, whose account was previously written off as uncollectable on 10 December 2016.

Required

a)Prepare journal entries to record all the above transactions/events.

b)Repeat the journal entry for the 18 December 2016 transaction, assuming that Watts Ltd uses the direct write-off method of accounting for bad debts, instead of the allowance method.