Final answer:
The question involves creating a journal entry for uncollectible accounts of a company with $750,000 in accounts receivable, by estimating 1 percent as bad debts. The appropriate entry would debit Bad Debts Expense and credit Allowance for Doubtful Accounts for the estimated uncollectible amount, which is $7,500.
Step-by-step explanation:
The question pertains to the accounting procedure for estimating uncollectible accounts using the percentage of receivables method. Sasquatch Corporation has $750,000 in accounts receivable and estimates that 1 percent of their accounts receivable are uncollectible. To account for these potentially uncollectible accounts, an adjusting entry is made to record the estimated bad debts expense and to increase the allowance for doubtful accounts (contra asset account). The journal entry would debit Bad Debts Expense and credit Allowance for Doubtful Accounts for $7,500 (1% of $750,000).