Required information [The following information applies to the questions display

Question

Required information

[The following information applies to the questions displayed below.]

At December 31, 2017, Hawke Company reports the following results for its calendar year.

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

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 4% of credit sales.

Bad debts are estimated to be 3% of total sales.

An aging analysis estimates that 7% of year-end accounts receivable are uncollectible.

Adjusting entries (all dated December 31, 2017).

2. Show how Accounts Receivable and the Allowance for Doubtful Accounts appear on its December 31, 2017, balance sheet given the facts in part 1a.

3. Show how Accounts Receivable and the Allowance for Doubtful Accounts appear on its December 31, 2017, balance sheet given the facts in part 1c.

Cash sales $ 1,846,330 Credit sales 3,884,000 5 Required information [The following information applies to the questions displayed below. At December 31, 2017, Hawke Company reports the following results for its calendar year. Part 1 of 3 6 points Cash sales Credit sales s1,846,330 3,884,000 eBook In addition, its unadjusted trial balance includes the following items. Accounts receivable Allowance for doubtful accounts $1,176,852 debit 10,040 debit Print References Required 1. Prepare the adjusting entry for this company to recognize bad debts under each of the following independent assumptions. a. b. C. Bad debts are estimated to be 4% of credit sales. Bad debts are estimated to be 3% of total sales. An aging analysis estimates that 7% of year-end accounts receivable are uncollectible. Adjusting entries (all dated December 31, 2017).

Explanation / Answer

1.

171909.90

171909.90

a)Expense is 4% of credit sales

To record estimated bad debts [$ 3,884,000 × 0.04] = $155,360

b) Expense is 3% of total sales:

To record estimated bad debts [($1,846,330 + $3,884,000) × 0.03] = $171909.90

c) Allowance is 7% of accounts receivable

Unadjusted balance = 10040 Debit

Estimated balance (1,176,852 * 7%) = 82379.64

Required adjustment =  92419.64

2. Show how Accounts Receivable and the Allowance for Doubtful Accounts appear on its December 31, 2017, balance sheet given the facts in part 1a.

3. Show how Accounts Receivable and the Allowance for Doubtful Accounts appear on its December 31, 2017, balance sheet given the facts in part 1c.

Transaction General Journal Debit Credit a. Bad debts expense 155,360 Allowance for doubtful accounts 155,360 b. Bad debts expense

171909.90

Allowance for doubtful accounts

171909.90

c. Bad debts expense 92419.64 Allowance for doubtful accounts 92419.64

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