Q:

1. Record the Nov 2020 adjusting entry for bad debts.

3. Record the Dec 2020 year-end adjusting entry for bad debts

Innovations Corp (C) uses the percentage of credit sales method to estimate bad debts each month and then uses the aging method at year-end. During November 2020, IC sold services on account for $114,000 and estimated that 12 of one percent of those sales would be uncollectible. At its December 31 year-end, total Accounts Receivable is $105,500, aged as follows: (1) 1 to 30 days old, $83,500; (2) 31 to 90 days old, $15,600; and (3) more than 90 days old, $6,400. Experience has shown that for each age group, the average rate of uncollectibility is (1) 1 percent, (2) 15 percent, and (3) 40 percent, respectively. Before the end-of-year adjusting entry is made, the Allowance for Doubtful Accounts has a $2,560 credit balance at December 31, 2020. 2. Prepare a schedule to estimate an appropriate year-end balance for the Allowance for Doubtful Accounts. Aging of Accounts Receivable Estimated Amount Uncollectible 1-30 days 31-90 days More than 90 days Estimated balance in allowance for doubtful accounts S 4. Show how the various accounts related to accounts receivable should be shown on the December 31, 2020, balance sheet. (Amounts to be deducted should be indicated with minus sign.) Partial Balance sheet at December 31, 2020 Accounts receivable, net of allowance $ 0