At year-end (December 31), Chan Company estimates its bad debts as 0.60% of its
ID: 2445381 • Letter: A
Question
At year-end (December 31), Chan Company estimates its bad debts as 0.60% of its annual credit sales of $663,000. Chan records its Bad Debts Expense for that estimate. On the following February 1, Chan decides that the $332 account of P. Park is uncollectible and writes it off as a bad debt. On June 5, Park unexpectedly pays the amount previously written off.
Prepare the journal entries of Chan to record these transactions and events of December 31, February 1, and June 5.
Record the estimated bad debts expense.
Record the write off an account.
Record reinstatement of an account.
Record the cash received on account.
At year-end (December 31), Chan Company estimates its bad debts as 0.60% of its annual credit sales of $663,000. Chan records its Bad Debts Expense for that estimate. On the following February 1, Chan decides that the $332 account of P. Park is uncollectible and writes it off as a bad debt. On June 5, Park unexpectedly pays the amount previously written off.
Explanation / Answer
Answer
December 31
Dr. Bad Debts Expense 3,978
Cr. Allowance for Bad Debts 3,978
( To record bad debts expense)
February 1
Dr. Allowance for Bad Debts 332
Cr. Accounts Receivable 332
(To record write of an bad debt)
June 5
Dr. Accounts Receivable 332
Cr. Allowance for Bad Debts 332
(To record reinstatement of account)
Dr. Cash 332
Cr. Accounts Receivable 332
(To record cash received on previously write off bad debt account)
Related Questions
Navigate
Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.