On January 1,2014,Tillit Corporation Changed Its Method of Accounting for Bad

question 79

Essay

On January 1,2014,Tillit Corporation changed its method of accounting for bad debts from the direct write-off method to the allowance method.Tillit's controller determined that an allowance of $33,000 should be established on that date.
(1)Ignoring income taxes,what is the amount of adjustment required,and where would it be reported in the financial statements?
(2)Prepare the journal entry (excluding income taxes)required to adjust the accounts.

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Definitions:

Useful Life

The estimated duration a fixed asset is expected to be economically usable, with normal wear and tear, for its intended purpose.

Differentiation Value

The unique value that a product or service offers to distinguish it from its competitors, enhancing its appeal to consumers.

Return on Investment

A performance measure used to evaluate the efficiency or profitability of an investment, calculated as the net profit from the investment divided by its cost.

Selling Price

The price at which a product or service is offered to customers for purchase.