Chapter 9, Problem S9.6SE

Applying the allowance method (percent-of-sales) to account for - uncollectibles

During its first year of operations, Signature Lamp Company earned net credit sales n- $314,000. Industry experience suggests that bad debts will amount to 4% of net credit sales. At December 31, 2016, accounts receivable total $45,000. The company uses the allowance method to account for uncollectibles.

Requirements

1. Journalize Signature’s Bad Debts Expense using the percent-of-sales method.
2. Show how to report accounts receivable on die balance sheet at December 31, 2016.