Question

At December 31, 2017 Hawke company reports the following results for its calendar year. cash sales $2,177,930 credit sales 3,028,000 In addition, its unadjusted trial balance includes the following items. Accounts receivable $917,484 debit Allowance for doubtful accounts 26,240 debit Prepare the adjusting entry to recognize bad debts 3% of credit sales 7% of total sales An aging analysis estimates that 7% of year-end accounts receivable are uncollectible.

Answer 1

1.

Date	Account title and explanation	Debit	Credit
Dec 31, 2017	Baddebt expenses ($3,028,000*3%)	$ 90,840
	Allowance for doubtful accounts		$ 90,840
	(To record baddebt expenses at 3% of credit sales)

2.

Date	Account title and explanation	Debit	Credit
Dec 31, 2017	Baddebt expenses (($3,028,000+$2,177,930)*7%)	$ 364,415
	Allowance for doubtful accounts		$ 364,415
	(To record baddebt expenses at 7% of total sales)

3.

Date	Account title and explanation	Debit	Credit
Dec 31, 2017	Baddebt expenses ($917,484*7%)+$26,240)	$ 90,464
	Allowance for doubtful accounts		$ 90,464
	(To record baddebt expenses at 7% of accounts receivable)

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