Question

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At December 31, 2018, Hawke Company reports the following results for its calendar year.

Required information (The following information applies to the questions displayed below.] At December 31, 2018, Hawke Company reports the following results for its calendar year. Cash sales Credit sales $1,478,710 3,022,000 In addition, its unadjusted trial balance includes the following items. Accounts receivable Allowance for doubtful accounts $915,666 debit 20,920 debit Required: 1. Prepare the adjusting entry for this company to recognize bad debts under each of the following independent assumptions. a. Bad debts are estimated to be 3% of credit sales. (Round your final answers to the nearest whole dollar.) b. Bad debts are estimated to be 2% of total sales. c. An aging analysis estimates that 6% of year-end accounts receivable are uncollectible. (Round your final answers to the nearest whole dollar.) Adjusting entries (all dated December 31, 2018).

Answer 1

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Part 1	Hawke Company
Event	General Journal	Debit	Credit
a	Bad Debt Expense	$                       90,660
	Allowance for doubtful accounts		$                                           90,660
	($3,022,000*3%)
b	Bad Debt Expense	$                       90,014
	Allowance for doubtful accounts		$                                           90,014
	($3,022,000+$1,478,710)*2%
c	Bad Debt Expense	$                       75,860
	Allowance for doubtful accounts		$                                           75,860
	($915,666*6%)+$20,920
Part 2	Current Assets:
	Accounts Receivable	$                    915,666
	Less: Allowance for doubtful accounts ($90,660-$20,920)	$                    (69,740)	$                                        845,926
Part 3	Current Assets:
	Accounts Receivable	$                    915,666
	Less: Allowance for doubtful accounts ($90,660-$20,920)	$                    (54,940)	$                                        860,726
	Jordan Company
Part 1
	Accounts Receivable	% Uncollectible	Estimated Uncollectible
Note Due	$                                                                                                                 500,000	1.35%	$                                             6,750
1 to 30	$                                                                                                                 200,000	2.10%	$                                             4,200
31 to 60	$                                                                                                                    40,000	6.60%	$                                             2,640
61 to 90	$                                                                                                                    20,000	33.25%	$                                             6,650
Over 90	$                                                                                                                      4,000	69.00%	$                                             2,760
	Estimated balance of allowance for uncollectibles		$                                           23,000
Part 2
Dec 31	Bad Debt Expense	$                         4,900
	Allowance for doubtful accounts		$                                             4,900
	$23,000-$18,100