Question
At year-end December 31, Chan Company estimates its bad debts as 0.90% of its annual credit sales of $897,000. Chan records its bad debts expense
At year-end December 31, Chan Company estimates its bad debts as 0.90% of its annual credit sales of $897,000. Chan records its bad debts expense for that estimate. On the following February 1, Chan decides that the $449 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. (Leave no cells blank.)
assets | liability | equity | |
dec 31 | |||
feb 1 | |||
jun 5 |
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