At year-end (December 31), Chan Company estimates its bad debts as 0.70% of its

Question

At year-end (December 31), Chan Company estimates its bad debts as 0.70% of its annual credit sales of $733,000. Chan records its Bad Debts Expense for that estimate. On the following February 1, Chan decides that the $367 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 for these transactions. View transaction list 1 Record the estimated bad debts expense. 2 Wrote off P. Park's account as uncollectible. 3 Reinstated Park's previously written off account 4 Record the cash received on account. Credit Note :· journal entry has been entered Record entry Clear entry View general journal

Explanation / Answer

Date Accounting title Debit Credit Dec 31 Bad debts expenses (733000 * 0.7%) 5131 Allowance for doubtful debts 5131 Feb 1 Allowance for doubtful debts 367 Accounts receivables 367 June 5 Accounts receivables 367 Allowance for doubtful debts 367 June 5 Cash 367 Accounts receivables 367

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