Chapter 8 assignment

Description / Instructions: Complete the following Week 1 Assignment in WileyPLUS: * Exercise 8-4 * Exercise 8-11 * BYP 8-1 * BYP 8-2

Question 1

The ledger of Wainwright Company at the end of the current year shows Accounts Receivable $78,000; Credit Sales $810,000; and Sales Returns and Allowances $40,000. (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 $900 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 10% of accounts receivable.
(c)

If Allowance for Doubtful Accounts has a debit balance of $500 in the trial balance, journalize the adjusting entry at December 31, assuming bad debts are expected to be 8% of accounts receivable.

Question 2

Suppose the following information was taken from the 2014 financial statements of FedEx Corporation, a major global transportation/delivery company.
(in millions)

2014

2013
Accounts receivable (gross)

$ 3,587

$ 4,517
Accounts receivable (net)

3,391

4,359
Allowance for doubtful accounts

196

158
Sales revenue

35,497

37,953
Total current assets

7,116

7,244

Answer each of the following questions.

Calculate the accounts receivable turnover and the average collection period for 2014 for FedEx. (Round answers to 1 decimal place, e.g. 12.5. Use 365 days for calculation.)
Accounts receivable turnover

times
The average collection period for 2014

days

Is accounts receivable a material component of the company’s total current assets?

Question 3

The financial statements of Tootsie Roll are presented below.
TOOTSIE ROLL INDUSTRIES, INC. AND SUBSIDIARIES