Exercise 7-5 Percent of sales method; write-off P3 At year-end (December 31), Ch

Question

Exercise 7-5 Percent of sales method; write-off P3 At year-end (December 31), Chan Company estimates its bad debts as 0.5% of its annual credit sales of S975.000. Chan records its bad debts expense for that estimate. On the following February 1, Chan decides that the $580 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

Explanation / Answer

Dear Student Thank you for using Chegg Please find below the answer Statementshowing Computations Paticulars Dr Cr Dec 31 Bad Debt Expense Dr              4,875.00 To Allowance for doubtful accounts              4,875.00 (975000 * .5%) Feb 01 Allowance for doubtful accounts Dr                  580.00 To Accounts receivable                  580.00 June 05 Accounts receivable Dr                  580.00 To Allowance for doubtful accounts                  580.00

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