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 $1,559,290 3,110,000 In addition, its unadjusted trial balance includes the following items. Accounts receivable Allowance for doubtful accounts $942,330 debit 18,540 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 2% 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

Explanation / Answer

Adjusting entry :

No Accounts & explanation debit credit (a) Bad debt expense (3110000*2%) 62200 allowance for doubtful accounts 62200 (To record adjusting entry (b) Bad debt expense (4669290*1%) 46692.90 allowance for doubtful accounts 46692.90 (To record adjusting entry) (c) Bad debt expense (942330*5%+18540) 65656.50 allowance for doubtful accounts 65656.50 (To record adjusting entry)

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