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

Cash sales$1,244,790Credit sales3,700,000

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

Accounts receivable$1,121,100debitAllowance for doubtful accounts12,070debit

To recognize bad debts under each of the following independent assumptions.

1. Bad debts are estimated to be 2% of credit sales.
2. Bad debts are estimated to be 1% of total sales.
3. An aging analysis estimates that 5% of year-end accounts receivable are uncollectible.

rev: 06_11_2020_QC_CS-216062

Problem 7-2A Part 1

Required:

1.Prepare the adjusting entry for this company to recognize bad debts under each of the following independent assumptions.

1. Bad debts are estimated to be 2% of credit sales.
2. Bad debts are estimated to be 1% of total sales.
3. An aging analysis estimates that 5% of year-end accounts receivable are uncollectible.