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At year-end December 31, Chan Company estimates its bad debts as 0.20% of its annual credit...

At year-end December 31, Chan Company estimates its bad debts as 0.20% of its annual credit sales of $603,000. Chan records its Bad Debts Expense for that estimate. On the following February 1, Chan decides that the $302 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 Chan's journal entries to record the transactions of December 31, February 1, and June 5.

  • Record the estimated bad debts expense.

Note: Enter debits before credits.
Date General Journal Debit Credit
Dec 31
  • Wrote off P. Park's account as uncollectible.

Note: Enter debits before credits.
Date General Journal Debit Credit
Feb 01
  • Reinstated Park's previously written off account.

Note: Enter debits before credits.
Date General Journal Debit Credit
Jun 05
  • Record the cash received on account.

Note: Enter debits before credits.
Date General Journal Debit Credit
Jun 05

Solutions

Expert Solution

  • Record the estimated bad debts expense.

Note: Enter debits before credits.
Date General Journal Debit Credit
Dec 31 Bad debt expense (603000*.2%) 1206
Allowance for doubtful accounts 1206
  • Wrote off P. Park's account as uncollectible.

Note: Enter debits before credits.
Date General Journal Debit Credit
Feb 01 Allowance for doubtful accounts 302
Account receivable-P. Park 302
  • Reinstated Park's previously written off account.

Note: Enter debits before credits.
Date General Journal Debit Credit
Jun 05 Account receivable-P.Park 302
Allowance for doubtful accounts 302
  • Record the cash received on account.

Note: Enter debits before credits.
Date General Journal Debit Credit
Jun 05 Cash 302
Account receivable-P.Park 302

ekkarill92 answered 2 years ago
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