. Estimate the balance of the Allowance for Doubtful Accounts using percent of sales method. Assume a $0 existing balance in Allowance for Doubtful Accounts. Hint: Identify the percent of uncollectible for credit sales. 2. Estimate the balance of the Allowance for Doubtful Accounts using percent of receivables method. Assume a $0 existing balance in Allowance for Doubtful Accounts. Hint: Identify the percent of uncollectible for accounts receivable.

Note: The question is attached below as picture

1. Bad debt expense under percentage of sales method = Credit sales * Percentage of doubtful account

= $7,150,000 * 1%

= $71,500

2. Balance in Allowance for doubtful account under percentage of receivables method = Accounts receivable balance at end * % of doubtful account

= $1,220,000 * 5%

= $61,000

3. Age         Amount       % of Un-collectible   Estimated Balance of

                                                     account             uncollectible account

Not due yet     830000                       2%                         16600

1-30                  254000                       3%                         7620

31-60                86000                         7%                         6020

61-90                38000                        33%                        12540

over 90 day     12000                         68%                        8160

Total                                                                                  $50,940

The estimated balance in allowance for doubtful account at end = $50,940

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