During its first year of operations, Bold Reds Wine Tour earned net credit sales of $322,000. Industry experience suggests that bad debts will amount to 2% of net credit sales. At December 31, 2025, accounts receivable total $36,000. The company uses the allowance method to account for uncollectibles. 

Requirements 

1. Journalize Bold Reds Wine Tour’s Bad Debts Expense using the percent-of-sales method. 

2. Show how to report accounts receivable on the balance sheet at December 31, 2025.