During its first year of operations, Scottish Products, Inc., had sales of $900,000, all on account. Industry experience suggests that Scottish Products' uncollectibles will amount to 2% of credit sales. At December 31, 20X4, Scottish Products' accounts receivable total $80,000. The company uses the allowance method to account for uncollectibles.
1. Make Scottish Products' journal entry for uncollectible-account expense using the percent-of-sales method.
2. Show how Scottish Products should report accounts receivable on its balance sheet at December 31, 20X4. Follow the reporting format illustrated in the middle of page 272.