Question: Accounting for uncollectible accounts using the allowance method (percent-of-sales) and reporting receivables on the balance sheet
Requirements: 1. Journalize Blue's transactions that occurred during 2016. The company uses the allowance method.
2. Post Blue's transactions to the Accounts Receivable and Allowance for Bad Debts T-accounts.
3. Journalize Blue's adjustment to record bad debts expense assuming Blue estimates bad debts as 4% of credit sales. Post the adjustment to the appropriate T-accounts.
4. Show how Blue Mountain Flagpoles will report net accounts receivable on its December 31, 2016, balance sheet.