At December 31, 2017, Hawke Company reports the following results for its calend

Question

At December 31, 2017, Hawke Company reports the following results for its calendar year.

In addition, its unadjusted trial balance includes the following items.

Required:
1. Prepare the adjusting entry for this company to recognize bad debts under each of the following independent assumptions.

Bad debts are estimated to be 3% of credit sales.

Bad debts are estimated to be 2% of total sales.

An aging analysis estimates that 6% of year-end accounts receivable are uncollectible.

Adjusting entries (all dated December 31, 2017).

Explanation / Answer

Transaction General Journal Debit Credit a. Bad debts expense 87,270 =2909000*3% Allowance for doubtful accounts 87,270 b. Bad debts expense 94,698 =(2909000+1825880)*2% Allowance for doubtful accounts 94,698 c. Bad debts expense 82,826 =(881427*6%)+29940 Allowance for doubtful accounts 82,826

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