1. Grace Investment uses the allowance method to account for uncollectible accounts. Indicate the effect that each of the following transactions will have on gross Accounts Receivable, the Allowance for Doubtful Accounts, net Accounts Receivable, and Bad-Debt Expense. Use + for increases and - for decreases, and 0 for no effect.

Gross Accounts Receivable

Allowance for Doubtful Accounts Net Accounts Receivable Bad-Debt Expense

An account receivable is written off

An account receivable is reinstated

A customer pays his account receivable

1.75% of $1,800,000 in

sales is estimated to be uncollectible

5% of $120,000 in accounts receivable is estimated to be uncollectible (the balance in the

Allowance account is a credit of $600)