The ledger of Wainwright Company at the end of the current year shows Accounts R
ID: 2492125 • Letter: T
Question
The ledger of Wainwright Company at the end of the current year shows Accounts Receivable $87,000; Credit Sales $852,000; and Sales Returns and Allowances $42,200. (Credit account titles are automatically indented when amount is entered. Do not indent manually.)
No. Account titles and explanation
Debit
Credit
(a)
(b)
©
(a) If Wainwright uses the direct write-off method to account for uncollectible accounts, journalize the adjusting entry at December 31, assuming Wainwright determines that Hiller’s $1,100 balance is uncollectible. (b) If Allowance for Doubtful Accounts has a credit balance of $1,100 in the trial balance, journalize the adjusting entry at December 31, assuming bad debts are expected to be 12% of accounts receivable. (c) If Allowance for Doubtful Accounts has a debit balance of $640 in the trial balance, journalize the adjusting entry at December 31, assuming bad debts are expected to be 9% of accounts receivable.Explanation / Answer
No.
Account titles and explanation
Debit
Credit
(a)
No adjusting entry is required since under the Direct Write-off Method, the amount that was written off is directly debited to the Bad Debts Expense
(b)
Bad Debt expense
$ 9,340
Allowance for Doubtful accounts
$ 9,340
($87,000 * 12%) - $1,100
(c)
Bad Debt expense
$ 8,470
Allowance for Doubtful accounts
$ 8,470
($87,000 * 9%) + $640
No.
Account titles and explanation
Debit
Credit
(a)
No adjusting entry is required since under the Direct Write-off Method, the amount that was written off is directly debited to the Bad Debts Expense
(b)
Bad Debt expense
$ 9,340
Allowance for Doubtful accounts
$ 9,340
($87,000 * 12%) - $1,100
(c)
Bad Debt expense
$ 8,470
Allowance for Doubtful accounts
$ 8,470
($87,000 * 9%) + $640
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