The ledger of Wainwright Company at the end of the current year shows Accounts R

Question

The ledger of Wainwright Company at the end of the current year shows Accounts Receivable $87,000; Credit Sales $904,000; and Sales Returns and Allowances $44,800.(credit account titles are automatically indented when amount is entered. Do not indent manually.) 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. If Allowance for Doubtful Accounts has a credit balance of $910 in the trial balance, journalize the adjusting entry at December 31, assuming bad debts are expected to be 11% of accounts receivable. If Allowance for Doubtful Accounts has a debit balance of $720 in the trial balance, journalize the adjusting entry at December 31, assuming bad debts are expected to be 9% of accounts receivable.

Explanation / Answer

particulars Debit ($) Credit($) a Cash 85900 Bad debts Written off 1100 To Accounts receivable 87000 ( Being Accounts receivable collected to an extent of 85900 and 1100 uncollected written off as bad debts) Profit and loss 1100 To Bad debts written off 1100 ( Being bad debts written off transferred to Profit and loss Account) b Bad debts 9570 Accounts receivable-87000 To Accounts receivable 9570 Bad debts=11%(87000)=9570 (being 11% of bad debts transferred to bad debts) Allowance for doubtful accounts=910 Balance to be written off to Profit and loss account= (9570-910)=8660 Profit and loss 8660 Allowance for doubtful accounts 910 to Bad debts 9570 (Being bad debts transferrd to allowance for doubtful accounts and balance to profit and loss account) c Bad debts 7830 Accounts receivable-87000 To Accounts receivable 7830 Bad debts=9%(87000)=7830 (being 9% of bad debts transferred to bad debts) Allowance for doubtful accounts=720 Balance to be written off to Profit and loss account= (7830-720)=7110 Profit and loss 7110 Allowance for doubtful accounts 720 to Bad debts 7830 (Being bad debts transferrd to allowance for doubtful accounts and balance to profit and loss account)

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