Required information The following information applies to the questions displaye

Question

Required information The following information applies to the questions displayed below.l At December 31, 2017, Hawke Company reports the following results for its calendar year Cash sales Credit sales $1,905,000 5,682,000 In addition, its unadjusted trial balance includes the following items. Accounts receivable Allowance for doubtful accounts $1,270,100 debit 16,580 debit 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 15% 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. a. c.

Explanation / Answer

a Bad debts expense 85230 =5682000*1.5%       Allowance for Doubtful accounts 85230 b Bad debts expense 75870 =(1905000+5682000)*1%       Allowance for Doubtful accounts 75870 c Bad debts expense 80085 =(1270100*5%)+16580       Allowance for Doubtful accounts 80085

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