$1$ E$8-8($Algo$)$ Recording and Reporting Allowance for Doubtful Accounts Using the Percentage of Credit

Sales and Aging of Accounts Receivable Methods $[$LO $8-2]$

Innovative Tech Incorporated $($ITI$)$ has been using the percentage of credit sales method to estimate bad debts. During November, ITI

sold services on account for $$150,000$ and estimated that $\frac{3}{4}$ of $1$ 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 $31$ year$-$end, total Accounts Receivable is $$83,300,$

aged as follows: $(1)1$ to $30$ days old, $$68,000$; $(2)31$ to $90$ days old, $$12,000$; and $(3)$ more than $90$ days old, $$3,300.$ The average

rate of uncollectibility for each age group is estimated to be $(1)12$ percent, $(2)24$ percent, and $(3)48$ percent, respectively. Prepare a

schedule to estimate an appropriate year$-$end balance for the Allowance for Doubtful Accounts.

Before the end$-$of$-$year adjusting entry is made, the Allowance for Doubtful Accounts has a $$1,250$ credit balance at December $31.$

Prepare the December $31$ adjusting entry.

Show how the various accounts related to accounts receivable should be shown on the December $31$ balance sheet.

Complete this question by entering your answers in the tabs below.

Prepare the November adjusting entry for bad debts. $($If no entry is required for a transaction$/$event$,$ select $"$No Journal Entry Required"

in the first account field.$)$

Journal entry worksheet Required $1$

Prepare the November adjusting entry for bad debts. $($If no entry is required for a transaction$/$event$,$ select $"$No Journal Entry Required"

in the first account field.$)$

Journal entry worksheet

Record the adjusting entry for bad debts as of November $30.$

Note: Enter debits before credits. Prepare the November adjusting entry for bad debts.

Starting in December, ITI switched to using the aging method. At its December $31$ year$-$end, total Accounts Receivable is $$83,300,$

aged as follows: $(1)1$ to $30$ days old, $$68,000$; $(2)31$ to $90$ days old, $$12,000$; and $(3)$ more than $90$ days old, $$3,300.$ The average

rate of uncollectibility for each age group is estimated to be $(1)12$ percent, $(2)24$ percent, and $(3)48$ percent, respectively. Prepare a

schedule to estimate an appropriate year$-$end balance for the Allowance for Doubtful Accounts.

Before the end$-$of$-$year adjusting entry is made, the Allowance for Doubtful Accounts has a $$1,250$ credit balance at December $31.$

Prepare the December $31$ adjusting entry.

Show how the various accounts related to accounts receivable should be shown on the December $31$ balance sheet.

Complete this question by entering your answers in the tabs below.

Required $1$

Required $2$

Starting in December, ITI switched to using the aging method. At its December $31$ year$-$end, total Accounts Receivable is

$$83,300,$ aged as follows: $(1)1$ to $30$ days old, $$68,000$; $(2)31$ to $90$ days old, $$12,000$; and $(3)$ more than $90$ days old,

$$3,300.$ The average rate of uncollectibility for each age group is estimated to be $(1)12$ percent, $(2)24$ percent, and $(3)48$

percent, respectively. Prepare a schedule to estimate an appropriate year$-$end balance for the Allowance for Doubtful

Accounts. References

Complete this question by entering your answers in the tabs below.

Required $1$

Required $2$

Required $3$

Before the end$-$of$-$year adjusting entry is made, the Allowance for Doubtful Accounts has a $$1,250$ credit balance at December $31.$

Prepare the December $31$ adjusting entry. $($If no entry is required for a transaction$/$event$,$ select $"$No Journal Entry Required" in the first

account field.$)$

Journal entry worksheet

Record the adjusting entry for bad debts as of December $31.$

Note: Enter debits before credits.E$8-8($Algo$)$ Recording and Reporting Allowance for Doubtful Accounts Using the Percentage of Credit

Sales and Aging of Accounts Receivable Methods $[$LO $8-2]$

Innovative Tech Incorporated $($ITI$)$ has been using the percentage of credit sales method to estimate bad debts. During November, ITI

sold services on account for $$150,000$ and estimated that $\frac{3}{4}$ of $1$ percent of those sales would be uncollectible.

Required: