Question

During its first year of operations, World Class Sport Shoes earned net credit sales of $322,000. Industry experience suggests that bad debts will amount to 1% of net credit sales. At December 31, 2018, accounts receivable total $36,000. The company uses the allowance method to account for uncollectibles. Read the requirements. Requirement 1. Journalize World Class' 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. Requirement 2. Show how to report accounts receivable on the balance sheet at December 31, 2018. Balance Sheet (Partial): Current Assets: 0 Requirements 1. Journalize World Class' 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

Answer 1

Date	account and explanation	Debit	Credit
	Bad debt expense (322000*1%)	3220
	Allowance for doubtful accounts		3220
	(To record bad debt expense)

Balance sheet (partial)

Current assets
Account receivable	36000
Less: Allowance for doubtful accounts	-3220	32780