Question 2 (of 4 velue 8.00 polnts Innovative Tech Inc. (ITI) uses the percentag

Question

Question 2 (of 4 velue 8.00 polnts Innovative Tech Inc. (ITI) uses the percentage of oredit sales mothod to estimate bad debls each month and then uses the aging mathod at year-end. During November, TI sold services on account for $160,000 and estimated that 1/2 of one percent of those sales would be uncolletible. Al is December 31 yoor-and, total Aocounts Raceivable i $80,200, aged as follow: (1) 1-30 days old, $87,000: (2)31-00 Experiance has shown that for each age grup,the vengerate of uncoloctibaty is (1) 11 percent, (2) 22 percent, ard 44 percont, pectively. Before the and-olyear edjusting entry is made, the Allowanoe for Doubtful Accounts has a days old, $10,000 and (3) more than 90 days old, $3,200. 31. Required 1. Prepare the November adjusting bad entry for bad debts. Of no only Is required for transactionlevent, select "No Joumal Entry Required in the first sccount field.) View transaction list Journal entry worksheet Record the adjusting entry for bad debts as of November 30. Note: Enter debits before credis General Journal Debit Credit Date Now 30 Record entry Clear entry View general journal 2. Prepare a schadule to estmate an appropriate year-end ba ance for the Allowance for Doubtdul Total

Explanation / Answer

1 Adjusting entry 30-Nov Bad debt expense 800 (160000*.5%)              Allowance for doubtful accounts 800 2 Accounts receivable % uncollectible Uncollectible amount 1-30 days 67000 11% 7370 31 - 90 days 10000 22% 2200 more than 90 days 3200 44% 1408 Estimated balance of allowance for uncollectible 80200 10978 3 Estimated balance of allowance for uncollectible 10978 Less Beginnning uncollectible balance -1200 Bad debt expense 9778 Bad debt expense 9778             Allowance for doubtful accounts 9778 4 Balance sheet Accounts receivable gross 80200 Allowance for doubtful accounts 10978 Net realizable value 69222

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