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Problem 7-2A Estimating and reporting bad debts LO P2, P3 At December 31, 2017, Hawke Company reports the following results for its calendar year. Cash

Problem 7-2A Estimating and reporting bad debts LO P2, P3

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

Cash sales $ 1,757,760
Credit sales 3,024,000

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

Accounts receivable $ 916,272 debit
Allowance for doubtful accounts 18,140 debit

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.

Problem 7-2A Part 2

2. Show how Accounts Receivable and the Allowance for Doubtful Accounts appear on its December 31, 2017, balance sheet given the facts in part 1a.

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