Quick Sale Inc. sold $10,000 worth of merchandise on credit in Year 1. The company estimates that 3 percent of all credit sales dollars will be uncollectible and uses the percentage of sales method to estimate its allowance for uncollectible accounts. In Year 2, Quick Sale collected $9,800 in cash and wrote off the remaining $200. The correct journal entry in Year 1 will include a:

a.Credit to sales of $9,700.

b.Debit to accounts receivable of $10,000.

c.Credit to allowance for uncollectible accounts of $200.

d.Debit to bad debt expense of $200.

Quick Sale Inc. sold $10,000 worth of merchandise on credit in Year 1. The company estimates that 3 percent of all credit sales dollars will be uncollectible and uses the percentage of sales method to estimate its allowance for uncollectible accounts. In Year 2, Quick Sale collected $9,800 in cash and wrote off the remaining $200. The correct journal entry in Year 1 will include a:

a.Credit to sales of $9,700.

b.Debit to accounts receivable of $10,000.

c.Credit to allowance for uncollectible accounts of $200.

d.Debit to bad debt expense of $200.