Question 1

The ledger of Wainwright Company at the end of the current year shows Accounts Receivable $76,000; Credit Sales $819,000; and Sales Returns and Allowances $48,300.

(Credit account titles are automatically indented when amount is entered. Do not indent manually.)

(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 $870 balance is uncollectible.

(b) If Allowance for Doubtful Accounts has a debit balance of $970 in the trial balance, journalize the adjusting entry at December 31, assuming bad debts are expected to be 9% of accounts receivable.