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 $ and estimated that of 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 yearend, total Accounts Receivable is $ aged as follows: to days old, $; to days old, $; and more than days old, $ The average rate of uncollectibility for each age group is estimated to be percent, percent, and percent, respectively. Prepare a schedule to estimate an appropriate yearend balance for the Allowance for Doubtful Accounts.
Before the endofyear adjusting entry is made, the Allowance for Doubtful Accounts has a $ credit balance at December Prepare the December adjusting entry.
Show how the various accounts related to accounts receivable should be shown on the December balance sheet.
