During its first year of operations, Environmental Products Inc. had sales of $875,000, all on account. Industry

Question:

During its first year of operations, Environmental Products Inc. had sales of $875,000, all on account. Industry experience suggests that Environmental Products' uncollectible will amount to 2% of credit sales. At December 31, 2013, Environmental Products' total $80,000. The company uses the allowance method to account for uncollectibles.
1. Make Environmental Products' journal entry for bad debt expense using the percentage-of sales method.
2. Show how Environmental Products could report on its at December 31, 2013, by disclosing the allowance for uncollectible accounts .
Accounts Receivable
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Balance sheet is a statement of the financial position of a business that list all the assets, liabilities, and owner’s equity and shareholder’s equity at a particular point of time. A balance sheet is also called as a “statement of financial...