Percent of sales allowance method (Learning Objectives 4 & 5) 5–10 min.

During its first year of operations, World Wide Travel earned revenue of $620,000 on account. Industry experience suggests that World Wide Travel’s uncollectible accounts will amount to 3% of revenues. On December 31, 2014, accounts receivable totaled

$177,400. The company uses the allowance method to account for uncollectibles.

Journalize World Wide Travel’s Bad Debt Expense using the percent-of-sales method.

Show how World Wide should report Accounts Receivable on its balance sheet on December 31, 2014.

AppendixLO1