Question

At December 31, Hawke Company reports the following results for its calendar year. Cash sales $ 1,285,070 Credit sales $ 3,610,000 In addition, its unadjusted trial balance includes the following items. Accounts receivable $ 1,093,830 debit Allowance for doubtful accounts $ 15,160 debit Required: 1. Prepare the adjusting entry to record bad debts under each separate assumption. 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.

Answer 1

Explanation: Dr Cr

1)

Allowance for doubtful account

3%*3610000 108300

Bad debt expense 108300

2)Allowance for doubtful account

2%*(1285070+3610000) 146,852.10

Bad debt expense 146,852.10

3)Allowance for doubtful account

1093830*6% 65,629.80

Bad debt expense 65,629.80