Question: Applying the allowance method (percent-of-sales) to account for uncollectibles During its first year of operations, Fall Wine Tour earned net credit sales of $379,000. Industry experience suggests that bad debts will amount to 2% of net credit sales. At December 31, 2016, accounts receivable total $38,000. The company uses the allowance method to account for uncollectibles.
Requirements: 1. Journalize Fall's Bad Debts Expense using the percent-of-sales method.
2. Show how to report accounts receivable on the balance sheet at December 31, 2016.