Required information The following information applies to the questions displaye

Question

Required information The following information applies to the questions displayed below. At December 31, 2017, Hawke Company reports the following results for its calendar year Cash sales Credit sales $1,858,130 3,046,000 In addition, its unadjusted trial balance includes the following items. Accounts receivable Allowance for doubtful accounts $922,938 debit 27,140 debit Required: 1. Prepare the adjusting entry for this company to recognize bad debts under each of the following independent assumptions a. b. c. 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.

Explanation / Answer

Working Note : Calculation of Bad debt expenses under the different presumptions

Answer 1

Answer 2

Answer 3

No Transaction General Journal Debit ($) Credit ($) 1 a Bad debt expense 91,380 Allowance for doubtful accounts 91,380 2 b Bad debt expense 98,083 Allowance for doubtful accounts 98,083 3 c Bad debt expense 82,516 Allowance for doubtful accounts 82,516

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