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Required information

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

Cash sales

Credit sales

$$400,000$

$$1,000,000$

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

Accounts receivable

Allowance for doubtful accounts

$$900,000$ debit

$$7,200$ debit

Required:

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

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

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

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