Required information

Skip to question

$[$The following information applies to the questions displayed below.$]$

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

Cash sales $ $100,000$

Credit sales $ $250,000$

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

Accounts receivable $ $225,000$ debit

Allowance for doubtful accounts $ $1,800$ debit

Required:

$1.$ Prepare the adjusting entry to record bad debts under each separate assumption.

Bad debts are estimated to be $4\%$ of credit sales.

Bad debts are estimated to be $3\%$ of total sales.

An aging analysis estimates that $4\%$ of year$-$end accounts receivable are uncollectible.

Adjusting entries $($all dated December $31).$