Estimating and reporting bad debts LO P2, P3 Skip to question [The following information applies to the questions displayed below.]
At December 31, 2017, Hawke Company reports the following results for its calendar year.
Cash sales $ 1,236,800
Credit sales 3,322,000
In addition, its unadjusted trial balance includes the following items.
Accounts receivable $ 1,006,566 debit
Allowance for doubtful accounts 11,190 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 3% of credit sales.
Bad debts are estimated to be 2% of total sales.
An aging analysis estimates that 6% 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.