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nnovative Tech Incorporated ( ITI ) has been using the percentage of credit sales method to estimate bad debts. During November, ITI sold services on
nnovative Tech Incorporated ITI has been using the percentage of credit sales method to estimate bad debts. During November, ITI sold services on account for $ and estimated that of percent of those sales would be uncollectible.
Required:
Prepare the November adjusting entry for bad debts.
Starting in December, ITI switched to using the aging method. At its December yearend, total Accounts Receivable is $ aged as follows: to days old, $; to days old, $; and more than days old, $ The average rate of uncollectibility for each age group is estimated to be percent, percent, and percent, respectively. Prepare a schedule to estimate an appropriate yearend balance for the Allowance for Doubtful Accounts.
Before the endofyear adjusting entry is made, the Allowance for Doubtful Accounts has a $ credit balance at December Prepare the December adjusting entry.
Show how the various accounts related to accounts receivable should be shown on the December balance sheet.
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