At year-end (December 31), Chan Company estimates its bad debts as 0.40% of its annual credit...

At year-end (December 31), Chan Company estimates its bad debts as 0.40% of its annual credit sales of $879,000. Chan records its Bad Debts Expense for that estimate. On the following February 1, Chan decides that the $440 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.

Expert Solution

Bad debt expense = .40% of 879000 = $3516 to be recorded on year end

JOURNAL

Date	Account	Debit	Credit
31-Dec	Bad-debt expenses	$ 3,516
	Allowance for uncollectbles		$ 3,516
	(Being provision for bad debts recorded)
1-Feb	Allowance for uncollectibles	$ 440
	Account Receivable-P. Park		$ 440
	(being bad debt recorded )
5-Jun	Account Receivable-P. Park	$ 440
	Allowance for uncollectible		$ 440
	(Being bad debt earlier recorded reversed)
5-Jun	Cash	$ 440
	Account Receivable-P. Park		$ 440
	(being cash received from P.Park)

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ekkarill92 answered 6 months ago

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