S9-3 Applying the allowance method (percentage of sales) to account for bad debts During its first year of operations, Signature Lamp Company earned revenue of $350000 on account. Industry experience suggests that bad debts will amount to 2% of revenues. At 31 December 2016, accounts receivable total $40000. The company uses the allowance method to account for doubtful debts. Requirements 1 Journalise Signature's bad debts expense using the percentage of sales method. 2 Show how to report accounts receivable on the balance sheet at 31 December 2016. Follow the first reporting format illustrated on page 413. see below for format for reporting Net Accounts Receivable (page 413) Balance sheet (partial): Accounts receivable Less: Allowance for doubtful debts Accounts receivable, net $2 455 (217) $2 238 Notes for S9-4 Note that this question follows on from S9-3. It is the 2nd year of operation of Signature Lamp Company. 59-4 Applying the allowance method (percentage of sales) to account for bad debts During 2017, Signature Lamp Company completed these transactions: a sales revenue on credit, $320 000 (ignore cost of sales) b collections on account, $340 000 c write-offs of uncollectables, $5 500 d bad debt expense, 2% of sales revenue. Requirement Journalise Signature's 2017 transactions. + additional requirement: Show how to report accounts receivable on the balance sheet at 31st December 2017. Follow the reporting format, as shown above, from page 413 of the textbook