Question

At December 31, Hawke Company reports the following results for its calendar year. Cash sales $ 2,135,390 Credit sales $ 2,890,000 In addition, its unadjusted trial balance includes the following items. Accounts receivable $ 875,670 debit Allowance for doubtful accounts $ 13,680 debit Problem 9-2A Part 1 Required: 1. Prepare the adjusting entry to record bad debts under each separate assumption. 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). (Do not round intermediate calculations.)

Answer 1

Answer:

   

Adjusting entries (all dated December 31)

   

D Loss for uncollectible accounts 74,977  

C Allowance for doubt accounts                        13,680  

C Account receivable                                     61,297  

   

D Expense Allowance for doubt accounts (credit sales) 115,600  

D Expense Allowance for doubt accounts (total sales) 150,762  

C                Allowance for doubt accounts                               266,362  

Explanation:

   

Cash sales 2135390  

Credit sales 2890000 61,297 2,828,703

   

Sales 5025390  

   

Account receivable               875,670  

Allowance for doubt accounts  13,680  

   

Bad debts ( Credit Sales) 4% 115,600  

Bad debts ( Total Sales) 3% 150,762  

Uncollectible                           7%   61,297  

   

Loss for uncollectible accounts 74,977  

Allowance for doubt accounts              13,680  

Account receivable                       61,297  

   

Expense Allowance  doubt accounts (credit sales) 115,600  

Expense Allowance doubt accounts (total sales)  150,762  

Allowance for doubt accounts                                         266,362