At year-end (December 31), Chan Company estimates its bad debts as 0.30% of its annual credit sales of $670,000. Chan records its Bad Debts Expense for that estimate. On the following February 1, Chan decides that the $335 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.

At year-end (December 31), Chan Company estimates its bad debts as 0.30% of its annual credit sales of $670,000. Chan records its Bad Debts Expense for that estimate. On the following February 1, Chan decides that the $335 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.


Explanation

Dec.

31

To record estimated bad debts expense (0.003 × $670,000) = $2,010

Thank you!