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| John Wiley and Sons, Inc.

(or Loss on damaged goods)

Cr. Cost of goods sold cost of goods

Page: 50-51

Similarly, if the allowance for doubtful accounts had a $6,000 $1,000 debit balance, then the amount

needed to adjust the balance in the allowance account to the desired level would be a debit credit of

$2,000 $5,000.

Allowance for Doubtful Accounts

Existing balance

6,000 1,000

Adjustment

2,000 5,000

Desired ending balance

4,000

Page: 52

If an amount previously written off using the direct write-off method is later collected, the amount is

debited to cash and credited to a revenue account, such as uncollectible accounts recovered. the

amount is debited to accounts receivable and credited to a revenue account such as bad debts

recovered and then another entry debits cash and credits accounts receivable

^.

The first entry re-establishes the receivable.

Dr. Accounts receivable

$XX

Cr. Bad debts recovered

$XX

The second journal entry records the cash received.

Dr. Cash

$XX

Cr. Accounts receivable

$XX

Page: 69

Income Statement (partial

Other revenues and gains

Interest revenue

$ xxx

Other expenses and losses

Loss on sale of securities

xxx

Net income

Other comprehensive income

Unrealized holding gain (loss) on available-

for-sale securities

(12,000)

Total other comprehensive income

Comprehensive income

Page: 73

Undervalued depreciable assets ($1 million/10 years)

$ 100,000

Unrecorded intangibles ($1.5 million/15 5 years)

300,000

Total

$ 400,000