Prepare the november adjusting entry for bad debts

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Question - 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 2020, IC sold services on account for $96,000 and estimated that 1/2 of one percent of those sales would be uncollectible. At its December 31 year-end, total Accounts Receivable is $91,000, aged as follows: (1) 1 to 30 days old, $76,000; (2) 31 to 90 days old, $10,700; and (3) more than 90 days old, $4,300. Experience has shown that for each age group, the average rate of un-collectability 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 $1,720 credit balance at December 31, 2020. Prepare the November 2020 adjusting entry for bad debts.

Reference no: EM133135421

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