During its first year of operations, Spring Garden Plans earned net credit sales of $ 322,000. Industry experience suggests that bad debts will amount to 2% of net credit sales. At December 31, 2014, accounts receivable total $ 36,000. The company uses the allowance method to account for uncollectibles.
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, 2014.