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Wiley PLUS Assignment Week 2 Exercise E8-3

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Wiley PLUS Assignment Week 2 Exercise E8-3
The ledger of Hixson Company at the end of the current year shows Accounts Receivable
$120,000, Sales $840,000, and Sales Returns and Allowances $30,000.
Correct.
If Hixson uses the direct write-off method to account for uncollectible accounts, journalize the
adjusting entry at December 31, assuming Hixson determines that Fell's $1,400 balance is
uncollectible.
Date Account/Description Debit
Dec. 31 Bad debts expense 1,400
Accounts receivable-Fell
Correct.
If Allowance for Doubtful Accounts has a credit balance of $2,100 in the trial balance,
journalize the adjusting entry at December 31, assuming bad debts are expected to be (1) 1%
of net sales, and (2) 10% of accounts receivable.
Date Account/Description Debit
(1) Dec. 31 Bad debts expense 8,100
Allowance for doubtful accounts
(2) Dec. 31 Bad debts expense 9,900
Allowance for doubtful accounts
Correct.
If Allowance for Doubtful Accounts has a debit balance of $200 in the trial balance, journalize
the adjusting entry at December 31, assuming bad debts are expected to be (1) 0.75% of net
sales and (2) 6% of accounts receivable.
Date Account/Description Debit
(1) Dec. 31 Bad debts expense 6,075
Allowance for doubtful accounts

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(2) Dec. 31 Bad debts expense 7,400
Allowance for doubtful accounts
DateAccount/DescriptionDebitCredit(1) Dec. 31Bad debts expense [($840,000 - $30,000) ×
1%] 8,100 Allowance for doubtful accounts 8,100(2) Dec. 31Bad debts expense
9,900 Allowance for doubtful accounts [($120,000 × 10%) - $2,100]
DateAccount/DescriptionDebitCredit(1) Dec. 31Bad debts expense [($840,000 - $30,000) × .
75%] 6,075 Allowance for doubtful accounts 6,075(2) Dec. 31Bad debts expense
7,400 Allowance for doubtful accounts [($120,000 × 6%) + $200]

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