At December 31 2017 Hawke Company reports the following resu

At December 31, 2017, Hawke Company reports the following results for its calendar year.

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

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

Answer is complete and correct.

Answer is complete but not entirely correct.

Cash sales	$	1,891,680
Credit sales		3,251,000

Solution

1 a. Bad debts expense 65020 Allowance for Doubtful accounts 65,020 (3,251,000*2%) b. Bad debts expense 51427 Allowance for Doubtful accounts 51,427 (1,891,680+3251,000)*1% c. Bad debts expense 61513 Allowance for Doubtful accounts 61,513 (985,053*5%)+12,260 2) for part 1a Current assets Accounts receivable 985,053 less:Allowance for doubtful accounts(65,020-12,260) 52760 932,293 For part 1c Current assets Accounts receivable 985,053 less:Allowance for doubtful accounts(61,513-12,260) 49253 935,800