Question

At year-end (December 31), Chan Company estimates its bad debts as 0.50% of its annual credit sales of $944,000. Chan records its Bad Debts Expense for that estimate. On the following February 1, Chan decides that the $472 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. 9:13 View transaction list ak Journal entry worksheet < 2 3 4 Record the estimated bad debts expense. Note: Enter debits before credits General Journal Debit Credit Date Dec 31 Record entry Clear entry View general Journal < Prev 1 of 5 !!! Next >

Answer 1

Estimated bad debt expense is = (Credit sales*0.50%) Estimated bad debt expense is = (944000*0.50%) Estimated bad debt expense is = $ 4,720/. Assuming allowance for doubtful accounts are followed, entry will be as follows :- Journal entries :- Date Accounts Title & Explanation Debit $ Credit $ 31-Dec Bad debt expense 4,720 To Allowance for doubtful accounts 4,720 (Entry for estimated bad debt expense) 01-Feb 472 Allowance for doubtful accounts To Accounts receivable (Entry for writeoff of uncollectible accounts) 472 05-Jun 472 Accounts Receivable To Bad debt expense (Entry for restatement of bad debt written off earlier) 472 05-Jun 472 Cash To Accounts Receivable (Entry for collection of earlier written off receivables) 472