Exercise 7-6 percent of sales method; write-off lo p3 at year-end (december 31), chan company estimates its bad debts as 0.70% of its annual credit sales of $641,000. chan records its bad debts expense for that estimate. on the following february 1, chan decides that the $321 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.

Explanation:

The journal entries are shown below:

December 31

Bad debt expense A/c Dr $448,700         ( $641,000 × 0.70%)

  To Allowance for Doubtful debts  $448,700

(Being bad debt expense is recorded)

February 1

Allowance for Doubtful debts A/c Dr $321

   To Accounts receivable                              $321

(Being uncollectible amount is recorded)

June 5

Allowance for Doubtful debts A/c Dr $321

   To Accounts receivable                              $321

(Being uncollectible amount is recorded)

June 5

Cash A/c Dr  $321

    To Accounts receivable   $321

(Being previously written off recorded)

commercial banking

provide online payment services

provide online banking

asset management firms

invest in people's funds in securities

accept tax return refunds