At year-end (December 31), Chan Company estimates its bad debts as 0 90% of its
ID: 2474049 • Letter: A
Question
At year-end (December 31), Chan Company estimates its bad debts as 0 90% of its annual credit sales of S917,000. Chan records its Bad Debts Expense for that estimate. On the following February 1, Chan decides that the $459 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, February1 and June 5 Journal Entry Worksheet Record the estimated bad debts e Date General Journal Debit Cr Dec 31 Enter debits before creditsExplanation / Answer
Calculation of Estimated Bad debts Expense:
Annual Credit Sales
$917,000
Estimated bad debts =0.90% of credit Sales
Estimated bad debts =0.90% * 917000 =
$ 8,253
Journal Entries:
Date
Accounts Titles and Explanations
Debit
Credit
Dec. 31
Bad Debts Expense
$ 8,253
Allowance for doubtful debts
$8,253
(Being provision made for bad debts )
Feb. 1
Allowance for doubtful debts
$ 459
Accounts Receivables - P.Park
$ 459
(Being Accounts written off as bad debts)
June. 5
Accounts Receivables - P.Park
$ 459
Allowance for doubtful debts
$ 459
(Being account reinstated)
Cash
$ 459
Accounts Receivables - P.Park
$ 459
(Being payment received in cash)
Calculation of Estimated Bad debts Expense:
Annual Credit Sales
$917,000
Estimated bad debts =0.90% of credit Sales
Estimated bad debts =0.90% * 917000 =
$ 8,253
Journal Entries:
Date
Accounts Titles and Explanations
Debit
Credit
Dec. 31
Bad Debts Expense
$ 8,253
Allowance for doubtful debts
$8,253
(Being provision made for bad debts )
Feb. 1
Allowance for doubtful debts
$ 459
Accounts Receivables - P.Park
$ 459
(Being Accounts written off as bad debts)
June. 5
Accounts Receivables - P.Park
$ 459
Allowance for doubtful debts
$ 459
(Being account reinstated)
Cash
$ 459
Accounts Receivables - P.Park
$ 459
(Being payment received in cash)
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