Question

During its first year of operations, Spring Garden Plans earned net credit sales of $320,000. Industry experience suggests that bad debts will amount to 3% of net credit sales. At December 31, 2018, accounts receivable total $42,000. 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.) Date Accounts and Explanation Debit Credit Dec. Requirements 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 Requirement 2. Show how to report accounts receivable on the balance sheet at December 31, 2018. Balance Sheet (Partial): Print Done Current Assets:

Answer 1

a) Journal entries

Date	account and explanation	Debit	Credit
Dec 31	Bad debt expense (320000*3%)	9600
	Allowance for doubtful account		9600

Balance sheet presentation

Current assets
Account receivable	42000
Less: Allowance for doubtful accounts	-9600	32400