Question

Required information [The following information applies to the questions displayed below.) At December 31, Hawke Company reports the following results for its calendar year. Cash sales Credit sales $1,798,320 $3,102,000 In addition, its unadjusted trial balance includes the following items. Accounts receivable Allowance for doubtful accounts $939,906 debit $ 24,180 debit Required: 1. Prepare the adjusting entry to record bad debts under each separate assumption. a. Bad debts are estimated to be 3% of credit sales. 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. Adjusting entries (all dated December 31). (Do not round Intermediate calculations.) View transaction list Trnal entry worksheet

Answer 1

	1
		Debit	Credit
a	Bad debts expense	93060		=3102000*3%
	Allowance for doubtful accounts		93060
b	Bad debts expense	98006		=(1798320+3102000)*2%
	Allowance for doubtful accounts		98006
c	Bad debts expense	80574		=(939906*6%)+24180
	Allowance for doubtful accounts		80574
	2
	Current Assets:
	Accounts Receivable	939906
	Less: Allowance for doubtful accounts	(68880)	871026	=93060-24180
	3
	Current Assets:
	Accounts Receivable	939906
	Less: Allowance for doubtful accounts	(56394)	883512	=939906*6%
	Alternatively if amount are not rounded off:
		Debit	Credit
a	Bad debts expense	93060
	Allowance for doubtful accounts		93060
b	Bad debts expense	98006.40
	Allowance for doubtful accounts		98006.40
c	Bad debts expense	80574.36
	Allowance for doubtful accounts		80574.36
	2
	Current Assets:
	Accounts Receivable	939906
	Less: Allowance for doubtful accounts	(68880)	871026
	3
	Current Assets:
	Accounts Receivable	939906
	Less: Allowance for doubtful accounts	(56394.36)	883511.64