IThe following information applies to the questions displayed below. At December

Question

IThe following information applies to the questions displayed below. At December 31, 2013, Hawke Company reports the following results for its calendar-year Cash sales Credit sales $ 2,114,460 2,998,000 In addition, its unadjusted trial balance includes the following items. Accounts receivable Allowance for doubtful accounts S 908,394 debit 29,320 debit value: 6.00 points Required 1. Prepare the adjusting entry for this company to recognize bad debts under each of the followin independent assumptions. 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, 2013)

Explanation / Answer

1)Total sales :2114460+2998000=5112460

2)

3)

Date Account Debit credit a Bad debt expense 89940 Allowance for doubtful account 89940 [being bad debt expense recorded2998000*.03] b Bad debt expense 102249.2 Allowance for doubtful account 102249.2 [being bad debt expense recorded 5112460*.02] c bad debt expense 83823.64 Allowance for doubtful account 83823.64 [being estimated uncollectible account recorded (908394*6%]=54503.64+29320 debit balance in allowance account]

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