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

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

Bad debts are estimated to be 1.5% of credit sales.

Bad debts are estimated to be 1% of total sales.

An aging analysis estimates that 5% of year-end accounts receivable are uncollectible.

Check Bad Debts Expense: (1a) $85,230, (1c) $80,085

Show how Accounts Receivable and the Allowance for Doubtful Accounts appear on its December 31, 2017, balance sheet given the facts in part 1a.

Show how Accounts Receivable and the Allowance for Doubtful Accounts appear on its December 31, 2017, balance sheet given the facts in part 1c.

Cash sales $1,905,000 Credit sales                                           5,682,000

Explanation / Answer

1)

4)

Date Account Debit credit a Bad debt expense 85230 Allowance for Doubt ful account 85230 [Estimated uncollectible : 5682000*.015] 1b Bad debt expense 75870 Allowance for Doubt ful account 75870 [estimated uncollectible (1905000+5682000)*.01] 1c Bad debt expense 80085 Allowance for Doubt ful account 80085 [estimated uncollectible (1270100*.05)=63505+16580 Debit balance]

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