7. During its first year of operations, Precious Gems Collection earned net credit sales of $366,000. Industry experience suggests that bad debts will amount to 3% of net credit sales. At December 31, 2018, accounts receivable total $35,000. The company uses the allowance method to account for uncollectibles. Read the requirements Requirement 1. Journalize Precious Gems' Bad Debts Expense using the percent-of-sales method. (Record debits first, then credits. Select the explanation on the last line of the journal entry table.) Date Accounts and Explanation Debit Credit Dec. 31 ||(1) (2) (3) (4) (5) Requirement 2. Show how to report accounts receivable on the balance sheet at December 31, 2018. Balance Sheet (Partial): Current Assets (6) (7) 1: Requirements 1. Journalize Precious Gems' Bad Debts Expense using the percent-of-sales method 2. Show how to report accounts receivable on the balance sheet at December 31, 2018. (1) O Accounts Payable O Accounts Receivable O Allowance for Bad Debts O Bad Debts Expense O Cash O Sales Revenue (2) O Accounts Payable Accounts Receivable Allowance for Bad Debts Bad Debts Expense Cash Sales Revenue (3) Accounts Payable O Accounts Receivable Allowance for Bad Debts Bad Debts Expense Cash Sales Revenue (4) O Accounts Payable Accounts Receivable Allowance for Bad Debts Bad Debts Expense Cash Sales Revenue (5) Reinstated previously written off account. Wrote off uncollectible accounts. O Collected cash on account. Record sales for the year. Recorded bad debts expense for the period. (6) Accounts Payable Accounts Receivable Allowance for Bad Debts Cash O Revenue Bad Debts Expense (7) O Less: Accounts Payable Less: Accounts Receivable Less: Allowance for Bad Debts Less: Cash O Less: Revenue Less: Bad Debts Expense