E8-8 Recording and Reporting Allowance for Doubtful Accounts Using the Percentage of Credit Sales and Aging of Accounts Receivable Methods Innovative Tech, Inc. (ITQ uses the percentage of credit sales method to estimate bad debts each month and then uses the aging method at year-end. During November, sold services on account for $100,000 and estimated that 0.5% of those sales would be uncollectible. At its December 31 year-end, total Accounts Receivable is $89,000, aged as follows: (1) 1-30 days old, S75,000; (2) 31-90 days old, $10,000; and (3) more than 90 days old, $4,000. Experience has shown that for each age group, the average rate of uncollectibility is (1) 10%, (2) 20%. and (3) 40%, respectively Before the end-of-year adjusting entry is made, the Allowance for Doubtful Accounts has a $1,600 credit balance at December 31. Required: 9 5 1. Prepare the November adjusting entry for bad debts. 2. Prepare a schedule to estimate an appropriate year-end balance for the Allowance for Doubtful Accounts. 3. Prepare the December 31 adjusting entry 4. Show how the various accounts related to accounts receivable should be shown on the December 31 balance sheet Slide 5 of 19 Office Theme 317 PM