1Exercise 8-4 The ledger of Wainwright Company at the end of the current year shows Accounts Receivable $76,000; Credit Sales $801,000; and Sales Returns and Allowances $50,000. (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 $1,000 balance is uncollectible. (b) If Allowance for Doubtful Accounts has a credit balance of $990 in the trial balance, journalize the adjusting entry at December 31, assuming bad debts are expected to be 11% of accounts receivable. (c) If Allowance for Doubtful Accounts has a debit balance of $850 in the trial balance, journalize the adjusting entry at December 31, assuming bad debts are expected to be 8% of accounts receivable. No. Account Titles and Explanation Debit Credit (a) (b) (c) Exercise 8-4 Accounts Payable Accounts Receivable Accumulated Depreciation-Equipment Allowance for Doubtful Accounts Bad Debt Expense Cash Common Stock Cost of Goods Sold Dividends Income Tax Expense Income Taxes Payable Interest Receivable Interest Revenue Inventory No Entry Notes Receivable Other Operating Expenses Other Receivables Retained Earnings Sales Discounts Sales Returns and Allowances Sales Revenue Service Charge Expense Supplies Supplies Expense Exercise 8-11 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) $ 3,480 $ 4,430 Accounts receivable (net) 3,472 4,401 Allowance for doubtful accounts 8 29 Sales revenue 34,728 37,059 Total current assets 7,883 7,166 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? 2 Broadening Your Perspective 8-1 The financial statements of Tootsie Roll are presented below. TOOTSIE ROLL INDUSTRIES, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF Earnings, Comprehensive Earnings and Retained Earnings (in thousands except per share data) For the year ended December 31, 2011 2010 2009 Net product sales $528,369 $517,149 $495,592 Rental and royalty revenue 4,136 4,299 3,739 Total revenue 532,505 521,448 499,331 Product cost of goods sold 365,225 349,334 319,775 Rental and royalty cost 1,038 1,088 852 Total costs 366,263 350,422 320,627 Product gross margin 163,144 167,815 175,817 Rental and royalty gross margin 3,098 3,211 2,887 Total gross margin 166,242 171,026 178.