Answer :
Answer: Journals entries to be recorded are as follows:
Debit Cash $530
Credit Accounts receivable $530
(To recognize receipt of cash wrt outstanding receivable)
Debit Allowance for doubtful accounts $770
Credit Accounts receivable $770
(Write-off of Thomas's outstanding accounts receivable)
Explanation: Since Discount Mart receives a check of $530 from Thomas's outstanding receivable, it has to recognize the receipt by applying the journals above. However, due to Thomas's failing health, he is not expected to make any further payment, therefore, the outstanding balance has to be written off against allowance account since Discount Mart adopts the allowance method for accounting for uncollectible receivables.
A journal entry is the act of recording or keeping track of any financial or non-financial activity.
Journals entries to be recorded are as follows:
Cash $530
To Accounts receivable $530
(To recognize receipt of cash with outstanding receivable)
Allowance for doubtful accounts $770
To Accounts receivable $770
(Write-off of Thomas's outstanding accounts receivable)
Explanation:- Since Discount Mart receives a check of $530 from Thomas's outstanding receivable, it has to recognize the receipt by applying the journals above.
However, due to Thomas's failing health, he is not expected to make any further payment, therefore, the outstanding balance has to be written off against allowance account since Discount Mart adopts the allowance method for accounting for uncollectible receivables.
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