Question

During its first year of operations, Spring Garden Plans earned net credit sales of $377,000. Industry experience suggests that bad debts will amount to 1% of net credit sales. At December 31, 2018, accounts receivable total $35,000. The company uses the allowance method to account for uncollectibles. Read the requirements. Requirement 1. Journalize Spring's Bad Debts Expense using the percent-of-sales method. (Record debits first, then credits. Select the explanation on the last line of the journal entry table.) Accounts and Explanation Date Debit Credit Requirements Dec. 31 1 Journalize Spring's Bad Debts Expense using the percent-of-sales method. 2. Show how to report accounts receivable on the balance sheet at December 31, 2018 Print Done Choose from any list or enter any number in the input fields and then click Check Answer 1part remaining Check Answer Clear All

Answer 1

a) Journal entry

Date	account and explanation	Debit	Credit
Dec 31	bad debt expense (377000*1%)	3770
	Allowance for doubtful accounts		3770

b) Balance sheet

Current assets
Account receivable	35000
Less: Allowance for doubtful accounts	-3770
	31230