Question

Chapter 9 Accounting for Receivables 349 At year-end (December 31), Chan Company estimates its bad debts as 1% of its annual credit sales of Exercise 9-6 $487.500. Chan records its bad debts expense for that estimate. On the following February 1, Chan de Percent of sales method: cides that the $580 account of P. Park is uncollectible and writes it off as a bad debt. On June 5. Park un- write-oh expectedly pays the amount previously written off. Prepare Chan's journal entries to record the transactions of December 31, February 1, and June 5.

Answer 1

Solution: Date Dec 31. Account title Bad debts expense Allowance for doubtful accounts (487500*1%) Debit Credit 4875 4875 Feb 1. 580 Allowance for doubtful accounts Account receivable Jun 5. 580 Account receivable Allowance for doubtful accounts 580 Jun 5. 580 Cash Account receivable 580