Question

Exercise 9-5 Percent of sales method; write-off LO P3

At year-end (December 31), Chan Company estimates its bad debts as 0.40% of its annual credit sales of $940,000. Chan records its Bad Debts Expense for that estimate. On the following February 1, Chan decides that the $470 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.

Note: Enter debits before credits.

	Date General Journal Debit Credit Dec 31

Answer 1

Answer:

Date	Accounts titles and Explanation	Debit ($)	Credit ($)
Dec-31	Bad-debt expenses(940,000*0.40%)	3,760
	Allowance for uncollectible		3,760
	(To record the allowance for uncollectible)
Feb-01	Allowance for uncollectible	470
	P. Park		470
	(To record the write off of amount due from P. Park)
Jun-05	P. Park	470
	Allowance for uncollectible		470
	Cash	470
	P. Park		470
	(To record the receipt from P. Park previously written off as uncollectible)