Question
Problem 9-2A Estimating and reporting bad debts LO P2, P3 [The following information applies to the questions displayed below.] At December 31, 2017, Hawke Company
Problem 9-2A Estimating and reporting bad debts LO P2, P3
[The following information applies to the questions displayed below.] At December 31, 2017, Hawke Company reports the following results for its calendar year.
Cash sales | $ | 2,129,230 | |
Credit sales | 3,122,000 | ||
In addition, its unadjusted trial balance includes the following items.
Accounts receivable | $ | 945,966 | debit |
Allowance for doubtful accounts | 12,520 | debit | |
Problem 9-2A Part 1
Required: 1. Prepare the adjusting entry for this company to recognize bad debts under each of the following independent assumptions.
Bad debts are estimated to be 3% of credit sales.
Bad debts are estimated to be 2% of total sales.
An aging analysis estimates that 6% of year-end accounts receivable are uncollectible.
Adjusting entries (all dated December 31, 2017).
Problem 9-2A 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.
Problem 9-2A Part 3
3. Show how Accounts Receivable and the Allowance for Doubtful Accounts appear on its December 31, 2017, balance sheet given the facts in part 1c.
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