At year-end (December 31). Chan Company estimates its bad debts as 0.5% of its a

Question

At year-end (December 31). Chan Company estimates its bad debts as 0.5% of its annual credit sales of S975.(XX). Chan records its bad debts expense for that estimate. On the following February 1, Chan decides that the S5S0 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 I. and June 5. At each calendar year-end. Mazie Supply Co. uses the percent of accounts receivable method to estimate bad debts. On December 31. 2015. it has outstanding accounts receivable of $55,000. and it estimates that 2% will be uncollectible. Prepare the adjusting entry to record bad debts expense for year 2015 under the assumption that the Allowance for Doubtful Accounts has (a) a S415 credit balance before the adjustment and (b) a $291 debit balance before the adjustment. Daley Company estimates uncollectible accounts using the allowance method at December 31. It prepared the following aging of receivables analysis. Estimate the balance of the Allowance for Doubtful Accounts using the aging of method. Prepare the adjusting entry to record bad debts expense using the estimate from part a. Assume the unadjusted balance in the allowance for doubtful accounts is a $3, 600 credit. Prepare the adjusting entry to record bad debts expense using the estimate from part a. Assume the unadjusted balance in the allowance for doubtful accounts is a $100 debit.

Explanation / Answer

Question 7-4 Journal Entries Date Account Titles Debit Credit Dec.31 Bad Debt Expenses 4875 Allowances for Doubtful debts 4875 Feb.1 Allowances for Doubtful debts 580 Accounts Receivable 580 June.5 Cash 580 Income Aummary 580 Question 7-5 (a) Required Provision (55000 x 2%) 1100 Less: Beginning Allowance for Doubtfull debt 415 New Provission required 685 Adjusting Journal Entries Date Account Titles Debit Credit Dec.31 Bad Debt Expenses 685 Allowances for Doubtful debts 685 Question 7-5 (b) Required Provision (55000 x 2%) 1100 Add: Beginning Allowance for Doubtfull debt 291 New Provission required 1391 Adjusting Journal Entries Date Account Titles Debit Credit Dec.31 Bad Debt Expenses 1391 Allowances for Doubtful debts 1391 Question 7-5 (a) Days past dues 0 1 to 30 31 to 60 61 to 90 over 90 Total Accounts Receivable 396000 90000 36000 18000 30000 570000 % of uncollectibles 0% 2% 5% 7% 10% Allowances for bad debt 0 1800 1800 1260 3000 7860 Question 7-5 (b) Required Provision 7860 Less: Beginning Allowance for Doubtfull debt 3600 New Provission required 4260 Adjusting Journal Entries Date Account Titles Debit Credit Dec.31 Bad Debt Expenses 4260 Allowances for Doubtful debts 4260 Question 7-5 ( c) Required Provision 7860 Add: Beginning Allowance for Doubtfull debt 100 New Provission required 7960 Adjusting Journal Entries Date Account Titles Debit Credit Dec.31 Bad Debt Expenses 7960 Allowances for Doubtful debts 7960

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