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At year-end (December 31), Chan Company estimates its bad debts as 1.00% of its annual credit sales of $917,000. Chan records its Bad Debts Expense for that estimate. On the following February 1, Chan decides that the $459 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 for the transactions.

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Answer:

Dec 31

Dr Bad debts expense 9,170

Cr Allowance for doubtful accounts 9,170

Feb 01

Dr Allowance for doubtful accounts $459

Cr Accounts receivable—P. Park $459

Jun 05

Dr Accounts receivable—P. Park $459

Cr Allowance for doubtful accounts $459

Jun 05

Dr Cash $459

Cr Accounts receivable—P. Park $459

Explanation:

Preparation of Chan's journal entries for the transactions.

Dec 31

Dr Bad debts expense 9,170

Cr Allowance for doubtful accounts 9,170

(1.00%*$917,000)

Feb 01

Dr Allowance for doubtful accounts $459

Cr Accounts receivable—P. Park $459

Jun 05

Dr Accounts receivable—P. Park $459

Cr Allowance for doubtful accounts $459

Jun 05

Dr Cash $459

Cr Accounts receivable—P. Park $459

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