An extract of balances at 31 December 2022 showed accounts receivable control $60 610, allowance for doubtful debts $750, GST payable $1000 and bad debts expense $2500.

Using the combined method, adjustments required at the end of December were:

– an additional bad debt of $605 ($550 + $55 GST) to be written off, and

– the allowance for doubtful debts to be increased to 2% of the accounts receivable control account.

You are required to prepare:

• adjusting journal entries

• extract income statement and balance sheet, and

• any necessary reversal entries.