Allowance for bad debts due in the first year = 1,000,000*5‰=$5,000\x0d\ Debit: Asset Impairment Loss - Allowance for Bad Debts Due 5,000\x0d\ Credit: Allowance for Bad Debts 5,000\x0d\ In the second year, a bad debt occurs\x0d\ Debit: Allowance for Bad Debts 8,000\x0d\ Credit: Accounts Receivable 8,000\ x0d\ Provision for bad debts due in the second year = 1,100,000*5-5000+8000=$8500\x0d\ Borrow: Impairment Loss on Assets 8500\x0d\ Credit: Provision for Bad Debts 8500\x0d\ Recovery of Bad Debts which have been written off in the third year\x0d\ Borrow: Bank Deposit 5000\x0d\ Credit: Provision for Bad Debts 5000\x0d\ Provision for Bad Debts in the Third Year Provision for bad debts = 1200,000*5‰-5000+8000-8500-5000=-4500\x0d\ Borrow: Provision for Bad Debts 4500\x0d\ Credit: Impairment Losses on Assets 4500\x0d\-5000-8500-5000+8000=-10,500 dollars\x0d\ 1200,000*5‰= 6000$\x0d\-10500+6000=-4500$