If the company uses the percent of sales method to account for its bad debt expense and estimates bad debt expense to be 1% of total sales what journal entry should the company make? What effect does this entry have on the accounting equation? If the company uses the percent of accounts receivable method to account for its bad debt expense and estimates bad debt expense to be 5% of accounts receivable. what journal entry should the company make? What effect does this entry have on the accounting equation