Question

At December 31, 2017, Hawke Company reports the following results for its calendar year. Cash sales $ 1,433,120 Credit sales 3,229,000 In addition, its unadjusted trial balance includes the following items. Accounts receivable $ 978,387 debit Allowance for doubtful accounts 28,910 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 2% of credit sales. Bad debts are estimated to be 1% of total sales. An aging analysis estimates that 5% of year-end accounts receivable are uncollectible. Adjusting entries (all dated December 31, 2017).

Show how Accounts Receivable and the Allowance for Doubtful Accounts appear on its December 31, 2017, balance sheet given the facts in part 1a.

Show how Accounts Receivable and the Allowance for Doubtful Accounts appear on its December 31, 2017, balance sheet given the facts in part 1a.

Answer 1

1)	Adjusting entry
no	Transaction	General Journal				Debit	Credit
1	a.	Bad debts expense				64580
		Allowance for Doubtful accounts					64,580
		(3,229,000*2%)
	b.	Bad debts expense				46621
		Allowance for Doubtful accounts					46,621
		(1,433,120+3,229,000)*1%
	c.	Bad debts expense				77829
		Allowance for Doubtful accounts					77,829
		(978,387*5%)+28,910
2)		for part 1a
		Current assets
		Accounts receivable						978,387
		less:Allowance for doubtful accounts						35670	942,717
		For part 1c
		Current assets
		Accounts receivable						978,387
		less:Allowance for doubtful accounts						48919	929,468
		(978387*5%)