At year-end (december 31), chan company estimates its bad debts as 0.5% of its annual credit sales of $975,000. chan records its bad debts expense for that estimate. on the following february 1, chan decides that the $580 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.

The journal entries is as follows:

Explanation:

December 31      Bad debts expense A/cDr     $ 4,875

                                  To Allowance for doubtful accountsCr   $4,875

February 1           Allowance for doubtful accountsA/cDr $580

                                     To Accounts receivable—P. ParkCr  $580

June 5                 Accounts receivable—P. Park A/cDr  $580

                                    To Allowance for doubtful accounts A/cCr  $580

June 5                 Cash A/c Dr $580

                                To Accounts receivable—P. ParkCr  $580

Working Note:

December 31

Amount estimated = Annual Credit Sales × 0.5%

                               = $975,000 × 0.5%

                               = $4,875

they work in some type of way

answera public company has access to more capital;