E8-8 Recording and Reporting Allowance for Doubtful Accounts Using the Percentage of Credit Sales and Aging of Accounts Receivable Methods [LO 8-2] Innovative Tech Inc. (ITI) uses the percentage of credit sales method to estimate bad debts each month and then uses the aging method at year-end. During November 2013, ITI sold services on account for $140,000 and estimated that 3/4 of one percent of those sales would be uncollectible. At its December 31 year-end, total Accounts Receivable is $86,600, aged as follows: (1) 1-30 days old, $71,000; (2) 31-90 days old, $12,000; and (3) more than 90 days old, $3,600. Experience has shown that for each age group, the average rate of uncollectibility is (1) 12 percent, (2) 24 percent, and (3) 48 percent, respectively. Before the end-of-year adjusting entry is made, the Allowance for Doubtful Accounts has a $1,400 credit balance at December 31, 2013. Required: 1. Prepare the November 2013 adjusting entry for bad debts. (If no entry is required for a Transaction/ event, select No Journal Entry Required in the first account field.) 2. Prepare a schedule to estimate an appropriate year-end balance for the Allowance for Doubtful Accounts. 3. Prepare the December 31, 2013, adjusting entry. (If no entry is required for a transaction/event, select No Journal Entry Required in the first account field.) 4. Show how the various accounts related to accounts receivable should be shown on the December 31, 2013, balance sheet