Question

At December 31, Hawke Company reports the following results for its calendar year. 

In addition, its unadjusted trial balance includes the following items.

 Accounts receivable........... $1.270.100 debit Allowance for doubtful accounts ..... $16,580 debit 

Required 

1. Prepare the adjusting entry to record bad debts under each. sep assumption.

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

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

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

2. Show how Accounts Receivable and the Allowance for Doubtful Accounts appear on its December 31 balance sheet given the facts in part la. 

3. Show how Accounts Receivable and the Allowance for Doubtful Accounts appear on its December 31 balance sheet given the facts in part lc.

Answer 1

no	Transaction	General Journal				Debit	Credit
1	a.	Bad debts expense				85230
		Allowance for Doubtful accounts					85,230
		(5,682,000*1.5%)
	b.	Bad debts expense				75870
		Allowance for Doubtful accounts					75,870
		(1,905,000+5,682,000)*1%
	c.	Bad debts expense				80085
		Allowance for Doubtful accounts					80,085
		(1,270,100*5%)+16580
2)		for part 1a
		Current assets
		Accounts receivable						1,270,100
		less:Allowance for doubtful accounts(85230-16580)						68650	1,201,450
		For part 1c
		Current assets
		Accounts receivable						1,270,100
		less:Allowance for doubtful accounts						63505	1,206,595