0 Required information [The following information applies to the questions displayed below.] At year-end December 31, Chan Company estimates its bad debts as 0.3% of its annual credit sales of $871,000. Chan records its bad debts expense for that estimate. On the following February 1, Chan decides that the $436 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. Compare the financial statement impact of write-off under the allowance method and the direct write-off method. For the transaction of February 1, indicate whether there would be an increase, decrease, or no effect, for Assets, Liabilities, and Equity. Note: Leave no cells blank. Allowance Method Direct Wirte-Off Method February 1 February 1 Assets Liabilities Equity

FINANCIAL ACCOUNTING
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ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
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Required information
[The following information applies to the questions displayed below.]
At year-end December 31, Chan Company estimates its bad debts as 0.3% of its annual credit sales of $871,000. Chan
records its bad debts expense for that estimate. On the following February 1, Chan decides that the $436 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.
Compare the financial statement impact of write-off under the allowance method and the direct write-off method. For the transaction of
February 1, indicate whether there would be an increase, decrease, or no effect, for Assets, Liabilities, and Equity.
Note: Leave no cells blank.
Allowance
Method
Direct Wirte-Off
Method
February 1
February 1
Assets
Liabilities
Equity
Transcribed Image Text:Required information [The following information applies to the questions displayed below.] At year-end December 31, Chan Company estimates its bad debts as 0.3% of its annual credit sales of $871,000. Chan records its bad debts expense for that estimate. On the following February 1, Chan decides that the $436 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. Compare the financial statement impact of write-off under the allowance method and the direct write-off method. For the transaction of February 1, indicate whether there would be an increase, decrease, or no effect, for Assets, Liabilities, and Equity. Note: Leave no cells blank. Allowance Method Direct Wirte-Off Method February 1 February 1 Assets Liabilities Equity
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