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E8-8 Recording and Reporting Allowance for Doubtful Accounts Using the Percentage of Credit Sales and Aging...

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E8-8 Recording and Reporting Allowance for Doubtful Accounts Using the Percentage of Credit Sales and Aging of Accounts Recei
Required 1 Required 2 Required 3 Required 4 Prepare the November adjusting entry for bad debts. (If no entry is required for
Required 1 Required 2 Required 3 Required 4 Starting in December, ITI switched to using the aging method. At Its December 31
Required 1 Required 2 Required 3 Required 4 Before the end-of-year adjusting entry is made, the Allowance for Doubtful Accoun
Book Required 1 Required 2 Required 3 Required 4 Show how the various accounts related to accounts receivable should be shown
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. (TI) has been using the percentage of credit sales method to estimate bad debts. During November, ITI sold services on account for $100,000 and estimated that of 1 percent of those sales would be uncollectible. Required: 1. Prepare the November adjusting entry for bad debts. 2. Starting in December, ITI switched to using the aging method. At its December 31 year-end, total Accounts Receivable is $89,000, aged as follows: (1) 1-30 days old, $75,000; (2) 31-90 days old, $10,000; and (3) more than 90 days old, $4,000. The average rate of uncollectibility for each age group is estimated to be (1) 10 percent. (2) 20 percent, and (3) 40 percent, respectively. Prepare a schedule to estimate an appropriate year-end balance for the Allowance for Doubtful Accounts. 3. Before the end-of-year adjusting entry is made, the Allowance for Doubtful Accounts has a $1,600 credit balance at December 31. 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.
Required 1 Required 2 Required 3 Required 4 Prepare the November adjusting entry for bad debts. (If no entry is required for a transaction/event, select in the first account field.) View transaction list Journal entry worksheet Record the adjusting entry for bad debts as of November 30. Note: Enter debits before credits General Journal Debit Credit Date November 30 Record entry Clear entry View general journal < Prey 7 of 7 Next
Required 1 Required 2 Required 3 Required 4 Starting in December, ITI switched to using the aging method. At Its December 31 year-end, total Accounts Receivable is $89,000, aged as follows: (1) 1-30 days old, $75,000; (2) 31-90 days old, $10,000; and (3) more than 90 days old, $4,000, The average rate of uncollectibility for each age group is estimated to be (1) 10 percent, (2) 20 percent, and (3) 40 percent, respectively. Prepare a schedule to estimate an appropriate year-end balance for the Allowance for Doubtful Accounts Show less 1-30 31-90 >> 90 Total Accounts Receivable Estimated Uncollectible (%) Estimated Uncollectible ($) < Required 1 Required 3 >
Required 1 Required 2 Required 3 Required 4 Before the end-of-year adjusting entry is made, the Allowance for Doubtful Accounts has a $1,600 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.) View transaction list Journal entry worksheet Record the adjusting entry for bad debts as of December 31. Note: Enter debits before credits General Journal Debit Credit December 31 Record entry Clear entry View general journal
Book Required 1 Required 2 Required 3 Required 4 Show how the various accounts related to accounts receivable should be shown on the December 31 balance sheet. Innovative Tech Inc. (II) Balance Sheet (partial) At December 31 ( Required 3
Business Accounting
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Answers

Innovative tech Inc. ( ITI )
Nov. 30 - Journal entry
Nov. 30 Bad debts exp.( 100000 *0.5% ) 500
Allowance for doubtful debts 500
Aging schedule
Totals Allowance % Allowance needed
1 to 30 75000 10.00% 7500
31- 90 10000 20% 2000
more than 90 4000 40% 1600
89000 11100
2. Journal entry
Dec.

31

 Bad debts exp.( 11100 - 1600 ) 9500
Allowance for doubtful debts 9500
Part 3- BS presentation
Gross amount of A/R 89000
Less;- Allowance for doubtful debts 11100
NRV 77900
.

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