In general journal form, prepare journal entries for the following transactions:
ID: 2511677 • Letter: I
Question
In general journal form, prepare journal entries for the following transactions:
Dec. 31 At year-end, Chan Company estimates its bad debt as .5% of its annual credit sles of $900,000.
Feb. 1 Chan decides thst the $600 account of P. Park is uncollectible and writes the account off from the allowance account.
June 5 Park unexpectedly pays the amount previously written off.
Dec. 31 Chan Company decides to use the percent of accounts receivable method to estimate bad debts. On December 31, 2014, it has an outstanding accounts receivable balance of $60,000 and it estimate 1% will be uncollectible. Prepare the adjusting entry to record bad debts expense for the year if the Allowance for doubtful Accounts has (a) a $500 credit balance before adjustment. (b) a $500 debit balance before the adjustment.
Explanation / Answer
Journal entries :
Date accounts & explanation debit credit Dec 31 Bad debt expense (900000*.5%) 4500 Allowance for doubtful accounts 4500 (To record bad debt expense) Feb 1 Allowance for doubtful accounts 600 Account receivable 600 (To record amount write off) June 5 Account receivable 600 Allowance for doubtful accounts 600 (To record amount reinstated) June 5 Cash 600 Account receivable 600 (To record amount received) Dec 31 Bad debt expense (60000*1%-500) 100 Allowance for doubtful accounts 100 (To record bad debt expense) Dec 31 Bad debt expense (600+500) 1100 Allowance for doubtful accounts 1100 (To record bad debt expense)