Bankruptcy Journal Entry
My sole proprietor boss has filed for personal and business bankruptcy. He is still going to operate the business but I need to make a general journal entry to remove the liabilities that were discharged.
Is this the entry I would make?
DR Liability Acct (credit card)
CR Discharge of Debt (an "other income" account)
Thanks for your help.
Your entry looks okay to me but I do not have a lot of experience with bankruptcy. Your boss's bankruptcy trustee should be able to assist you with any entries required ... to ensure you get it right.
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