At December 31, 2017, Hawke Company reports the following results for its calend
ID: 2608156 • Letter: A
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 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
Answer is complete and correct.
Answer is complete but not entirely correct.
Cash sales $ 1,891,680 Credit sales 3,251,000Explanation / Answer
1 a. Bad debts expense 65020 Allowance for Doubtful accounts 65,020 (3,251,000*2%) b. Bad debts expense 51427 Allowance for Doubtful accounts 51,427 (1,891,680+3251,000)*1% c. Bad debts expense 61513 Allowance for Doubtful accounts 61,513 (985,053*5%)+12,260 2) for part 1a Current assets Accounts receivable 985,053 less:Allowance for doubtful accounts(65,020-12,260) 52760 932,293 For part 1c Current assets Accounts receivable 985,053 less:Allowance for doubtful accounts(61,513-12,260) 49253 935,800
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