At December 31, 2018, 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.

a. Bad debts are estimated to be 1.5% of credit sales.

b. Bad debts are estimated to be 1% of total sales.

c. An aging analysis estimates that 5% of year-end accounts receivable are uncollectible.

2. Show how Accounts Receivable and the Allowance for Doubtful Accounts appear on its December 31, 2018, balance sheet given the facts in part 1a.

3. Show how Accounts Receivable and the Allowance for Doubtful Accounts appear on its December 31, 2018, balance sheet given the facts in part 1c.

Transcribed Image Text:

Cash sales.... Credit sales.... $1,905,000 5,682,000 Accounts receivable... Allowance for doubtful accounts. $1,270,100 debit 16,580 debit