Estimating bad debts as a percentage of sales

Transaction

Credit sales for the year were $480,000.00. The company estimates that 2% of credit sales will prove uncollectible. Before adjustment, the Allowance for Doubtful Accounts has a credit balance of $900.00. Record the year-end entry for bad debts.

Assumptions: The company uses the allowance method with the percentage-of-sales approach.