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. Cash sales $ 1,585,840 Credit sales 3,218,000 In addition, its unadjusted trial balance includes the following items. Accounts receivable $ 975,054 debit Allowance for doubtful accounts 23,020 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 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).

Answer 1

Solution: