At year-end December 31, Chan Company estimates its bad debts as 0.70% of its annual credit...

Transcribed Image Text:

At year-end December 31, Chan Company estimates its bad debts as 0.70% of its annual credit sales of $771,000. Chan records its bad debts expense for that estimate. On the following February 1, Chan decides that the $386 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. Determine the impact of the December 31, February 1, and June 5 transactions on the accounting equation. For each transaction, indicate whether there would be an increase, decrease, or no effect, for Assets, Liabilities, and Equity. Note: Leave no cells blank. December 31 February 1 June 5 Assets Liabilities Equity At year-end December 31, Chan Company estimates its bad debts as 0.70% of its annual credit sales of $771,000. Chan records its bad debts expense for that estimate. On the following February 1, Chan decides that the $386 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. Determine the impact of the December 31, February 1, and June 5 transactions on the accounting equation. For each transaction, indicate whether there would be an increase, decrease, or no effect, for Assets, Liabilities, and Equity. Note: Leave no cells blank. December 31 February 1 June 5 Assets Liabilities Equity

Answer rating: 100% (QA)

Lets analyze the impact of each transaction on the accounting equation 1 December 31 Chan Company es... View the full answer