Return to the example of accounting for uncollectibles that begins under the heading "Writing Off Uncollectible Accounts" on page 513. Suppose past experience indicates that the company will fail to collect 2 percent of net credit sales, which totaled $100,000 during the three-month period January through March of 2018.
Required
1. Record bad-debt expense for the three-month period January through March under:
a. The percent-of-sales method (allowance method).
b. The direct write-off method.
2. Which method of accounting for uncollectibles is better? What makes this preferred method better? Mention accounting concepts and principles in your answer.