Question

At December 31, Hawke Company reports the following results for its calendar year. Cash sales $ 2,135,390 Credit sales $ 2,890,000 In addition, its unadjusted trial balance includes the following items. Accounts receivable $ 875,670 debit Allowance for doubtful accounts $ 13,680 debit Problem 9-2A Part 1 Required: 1. Prepare the adjusting entry to record bad debts under each separate assumption. 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). (Do not round intermediate calculations.)

Answer 1

Adjusting entries (all dated December 31)

D Loss for uncollectible accounts 74,977

C Allowance for doubt accounts 13,680

C Account receivable 61,297

D Expense Allowance for doubt accounts (credit sales) 115,600

D Expense Allowance for doubt accounts (total sales) 150,762

C Allowance for doubt accounts 266,362

Step-by-step explanation:

Cash sales 2135390

Credit sales 2890000 61,297 2,828,703

Sales 5025390

Account receivable 875,670

Allowance for doubt accounts 13,680

Bad debts ( Credit Sales) 4% 115,600

Bad debts ( Total Sales) 3% 150,762

Uncollectible 7% 61,297

Loss for uncollectible accounts 74,977

Allowance for doubt accounts 13,680

Account receivable 61,297

Expense Allowance doubt accounts (credit sales) 115,600

Expense Allowance doubt accounts (total sales) 150,762

Allowance for doubt accounts 266,362