Exercise 9-6 Percent of sales method; write-off LO P3 At year-end (December 31), Chan Company estimates its bad debts as 0.30% of its annual credit sales of $931,000. Chan records its Bad Debts Expense for that estimate. On the following February 1, Chan decides that the $466 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.

Refer to the below for explanation.

Explanation:

December 31,

Amount estimated = Annual credit sales × 0.30.%

= $931,000 × 0.30%

= $2,793

Please see journal entries below;

December 31, Bad debts expense A/c Dr. $2,793

To allowance for doubtful accounts Cr $2,793

February 1, Allowance for doubtful A/c Dr. $466

To accounts receivable P.ParkCr $466

June 5, Accounts receivable P. Park account Dr $466

To allowance for doubtful accounts Cr $466

June 5,. Cash A/c Dr $466

To accounts receivable P.ParkCr $466