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At December 31, 2013, Hawke Company reports the following results for its calendar-year. Cash sales $ 1,984,490 Credit sales 3,867,000 In addition, its unadjusted trial
At December 31, 2013, Hawke Company reports the following results for its calendar-year. |
Cash sales | $ | 1,984,490 |
Credit sales | 3,867,000 | |
In addition, its unadjusted trial balance includes the following items. |
Accounts receivable | $ | 1,171,701 | debit |
Allowance for doubtful accounts | 13,130 | debit | |
|
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 3% of credit sales. |
b. | Bad debts are estimated to be 2% of total sales. |
c. | An aging analysis estimates that 6% of year-end accounts receivable are uncollectible. |
Adjusting entries (all dated December 31, 2013). |
2. Show how Accounts Receivable and the Allowance for Doubtful Accounts appear on its December 31, 2013, balance sheet given the facts in part 1a.
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3. Show how Accounts Receivable and the Allowance for Doubtful Accounts appear on its December 31, 2013, balance sheet given the facts in part 1c. |
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