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Determine the effects of transactions using the allowance method. (LO 3). Health & Nutrition, Inc., uses the allowance method to account for bad debts. Indicate the effect that each of the following independent transactions will have on gross accounts receivable, the allowance for uncollectible accounts, net accounts receivable, and bad debt expense. Use (+) for increase, (-) for decrease, and (0) for no effect. A customer pays his or her bill. Of $400,000 in sales, 2% is estimated to be uncollectible. Of $315,000 in accounts receivable, 3% is estimated to be uncollectible. Last year, an excess of $500 beyond what was expected (what had been recorded) was written off. A. Determine bad debts expense using the percentage of sales method. (LO 3). Murray's Drug Supply uses the allowance method to account for bad debts. During 2010, the company recorded $425,000 in credit sales. At the end of 2010 but before adjustments, account balances were accounts receivable, $150,000 and allowance for uncollectible accounts, $(2,000)