During its first year of operations, World Class Sport Shoes earned revenue of \($388,000\) on account. Industry experience suggests that bad debts will amount to 4% of revenues. At December 31, 2012, accounts receivable total \($35,000\). The company uses the allowance method to account for uncollectibles.
Requirements
1. Journalize World Class’ sales and uncollectible-account expense using the percent-of-sales method.
2. Show how to report accounts receivable on the balance sheet at December 31, 2012. Use the long reporting format illustrated in the chapter.