Answer:
Journal entries below
Explanation:
Dec 31, Bad debts expense a/c Dr $4,875
To Allowance for doubtful a/c Cr $4,875
(To record bad debt expense)
Feb 1, Allowance for doubtful a/c Dr $580
To Accounts receivable - P. Park a/c Cr $580
(To record allowance for doubtful a/c)
June 5, Accounts receivable -P. Park Dr $580
To Allowance for doubtful a/c Cr $580
(To record bad debt written off)
June 5, Cash a/c Dr $580
To Accounts receivable - P. Park a/c Cr $580
(To record cash paid).
• Chen write off the receivable from balance sheet using the percentage of sales method of receivable of ($975,000 × 0.5%) = $4,875.
• Also on February 1, Chen writes off P.Park from receivable of $580 since he knew he will not pay but did pay on June 5 for $580; meaning that Chen reinstate the receivable afterwards collected cash from receivable.
