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# Required information Problem 7-2A Estimating and reporting bad debts LO P2, P3 Skip to question [The...

Required information

Problem 7-2A Estimating and reporting bad debts LO P2, P3

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

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

 Cash sales \$ 1,266,330 Credit sales \$ 3,708,000

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

 Accounts receivable \$ 1,123,524 debit Allowance for doubtful accounts \$ 16,940 debit

Problem 7-2A Part 1

Required:
1. Prepare the adjusting entry to record bad debts under each separate assumption.

1. Bad debts are estimated to be 4% of credit sales.
2. Bad debts are estimated to be 3% of total sales.
3. An aging analysis estimates that 7% of year-end accounts receivable are uncollectible.

Problem 7-2A Estimating and reporting bad debts LO P2, P3

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

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

 Cash sales \$ 1,266,330 Credit sales \$ 3,708,000

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

 Accounts receivable \$ 1,123,524 debit Allowance for doubtful accounts \$ 16,940 debit

Problem 7-2A Part 2

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

 Current assets: Accounts receivable \$1,123,524 Less: Allowance for doubtful accounts 148,320 \$975,204

my less allowance for doubtful accounts is wrong how do i calculate this

Req.1 Journal Entry:

No Tran. Account Name Debit Credit
1 a. Bad debts expense \$148,320
Allowance for Doubtful accounts \$148,320
(3,708,000 *4%)
b. Bad debts expense \$149,230
Allowance for Doubtful accounts \$149,230
(1,266,330 +3,708,000)*3%
c. Bad debts expense \$95,587
Allowance for Doubtful accounts \$95,587
(1,123,524*7%)+16940

Req .2 ( Part A)

 Current Assets: Accounts receivable 1,123,524 less:Allowance for doubtful accounts(148320-16940) (131,380)9 \$ 992,144

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