During its first year of operations, Signature Lamp Company earned net credit sales of $314,000. Industry experience suggests that bad debts will amount to 4% of net credit sales. At December 31, 2016, accounts receivable total $45,000. The company uses the allowance method to account for un-collectibles.
1. Journalize Signatures Bad Debts Expense using the percent-of-sales method.
2. Show how to report accounts receivable on the balance sheet at December 31, 2016.