During its first year of operations, Environmental Products Inc. had sales of $875,000, all on account. Industry experience suggests that Environmental Products's bad debt expense will be $17,500. At December 31, 2016, Environmental Products's accounts receivable total $80,000. The company uses the allowance method to account for un-collectibles.
1. Make Environmental Products's journal entry for bad debt expense.
2. Show how Environmental Products could report accounts receivable on its balance sheet at December 31, 2016, by disclosing the allowance for uncollectible accounts.