Requiredi (The following information applies to the questions displayed below] A

Question

Requiredi (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 $1,882,510 3, 249,eee In addition, its unadjusted trial balance includes the following items. $984,447 debit 11,340 debit Allowance for doubtful accounts 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 a Adjusting entries (all dated December 31, 2017)

Explanation / Answer

THe following are the adjusting entires:

b.

c.

(amount = $984,447 *6% =>59,066.82 + 11,340 =>$70,406.82)

a. Bad debts expense a/c $97,470 ..........To Allowance for doubtful debts $97,470 (amount = 3% * $3,249,000 =>$97,470)

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