Some Company uses the allowance method for handling receivables. Total Sales for the year were $1,000,000 ($650,000 credit sales and $350,000 cash sales). The unadjusted balance for Accounts Receivable was is $96,000 debit balance and Allowance for Doubtful Accounts $1,925 DEBIT balance. For each unrelated situation below, provide the Dec 31 adjusting entry for Bad Debt Expense, post the entry to T-accounts, and show how accounts receivable would appear on the balance sheet.
a) Some company estimates that 2% of credit sales will be uncollectible.