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Innovations Corp (IC) uses the percentage of credit sales method to estimate bad debts each...

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Accounting

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Innovations Corp (IC) uses the percentage of credit sales method to estimate bad debts each month and then uses the aging method at year-end. During November 2014, IC sold services on account for $134,000 and estimated that of one percent of those sales would be uncollectable. At its December 31 year-end, total Accounts Receivable is $121,000, aged as follows: (1) 1 to 30 days old, $91,000; (2) 31 to 90 days old, $21.200; and (3) more than 90 days old, $8,800. Experience has shown that for each age group, the average rate of uncollectability 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 $3,520 credit balance at December 31, 2014. Required: 1. Prepare the November 2014 adjusting entry for bad debts. (If no entry is required for a transaction/event, select "No journal entry required" in the first account field.)

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