Selected unadjusted account balances at December 31, 2017, are shown below for Demron Servicing.

Required
a. Demron estimates that 1.5% of net credit sales will prove to be uncollectible. Prepare the adjusting entry required on December 31, 2017, to estimate uncollectible receivables.
b. During 2018, credit sales were $620,000 (cost of sales $406,500); sales discounts of $12,000 were taken when accounts receivable of $440,000 were collected; and accounts written off during the year totalled $10,000. Prepare the entries for these transactions.
c. Record the adjusting entry required on December 31, 2018, to estimate uncollectible receivables, assuming it is based on 1.5% of net credit sales.
d. Show how accounts receivable would appear on the December 31, 2018, balance sheet. Analysis Component: Comment on the advantages and disadvantages of using the income statement approach for estimating uncollectibles.

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Debit Account Credit Accounts receivable... Allowance for doubtful accounts... Sales (all on credit) Sales discounts ... $70,000 $ 1,100 480,000 8,000 ......