Hawke Company

At December 31, Hawke Company reports the following for its calendar year:

Cash Sales: $1,781,060

Credit Sales: $3,630,000

The unadjusted trial balance includes the following:

Accounts receivable: $1,099,890

Allowance for doubtful accounts (ADA): $27,740 debit balance

Use this information to answer each of following questions.

1. Assume bad debts are estimated at 2% of TOTAL sales.
   1. Providing the necessary adjusting entry.
   2. Provide the balance in the ADA account shown on the December 31 balance sheet.
2. Assumie bad debts are estimated at 8% year-end receivables.
   1. Providing the necessary adjusting entry.
   2. Provide the balance in the ADA account shown on the December 31 balance sheet.